Bats and Lepers in the Gold Miners
- Posted by Greg Harmon
- on April 10th, 2013
My rule of thumb for the last two years has been: Treat Gold Miners ($GDX) Like They Have Leprosy. Outside of the bearish Bat on the chart below there really has not been any reason to own them. That may be ending now that it has retraced lower to a 127% Fibonacci extension of the Bat, but 138.2% or 161.8% would be more typical. Bounce here or not, they still have leprosy. All the Simple Moving Averages (SMA)
are overhead and moving lower with a Moving Average Convergence Divergence indicator (MACD) that is moving down and a Relative Strength Index (RSI) in bearish territory. Pieces keep falling off. Don’t be like Mother Theresa, hell bent on helping the lepers, because there does not seem to be any change coming soon. The key lies in the yellow metal itself. The ratio chart of the Miners to Gold ($GC_F, $GLD) shows a steady decline since November 2010. Most importantly this shows no signs or turning around other than
the RSI being technically oversold. The Miners have been falling relative to the price of Gold. But Gold has been moving in a neutral range over this timeframe. Unfortunately that is the bad news. Or maybe the good news. Either way it is worth watching as a catalyst for the Miners. With Gold approaching the bottom
of the zone a move lower through support at 1550 could be disastrous for the Miners. But if everyone is expecting that has it already been discounted, built into the price? Keep watching as it seems a move in the Miners is coming. One way or the other.
Join the Dragonfly Capital Views Premium Membership
Its Time For a Sale at Dragonfly Capital!
And what better time than during March Madness. The Annual subscription rate for the Premium Dragonfly Capital Views Service, will be cut by 20% to $600. That is nearly 45% off of the monthly rate for a year! Follow this link to start your subscription, with free 7 day trial, today.
Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through March 2013 Expiry
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- The Cup Looks Full on Sally Beauty Holdings
- My Thoughts on A Possible Pullback on the S&P 500 (video)
- Top Trade Ideas for the Week of September 15, 2014: Bonus Idea
- Top Trade Ideas for the Week of September 15, 2014: The Rest
- Top Trade Ideas for the Week of September 15, 2014: The Rest Premium
- Top Trade Ideas for the Week of September 15, 2014: The Best
- SPY Trends and Influencers September 13, 2014
- Macro Week in Review/Preview September 12, 2014
- How to Adjust to the Roller Coaster Market
- Watching DirecTV for a Sunday Ticket Higher