Yesterday we showed the ETF charts that were at bounce points (if they were going to bounce). Today GDX and GDXJ are up around 4%. I grudgingly added a couple miners to the 2 I held (KDX.to and PG.to). I added MUX and RBY. That is not the point of this update, it’s just a note of what one little participant did.
The update is to let you know that the fundamentals we watch, while not fixed, are not flashing any kind of negative divergence to this bounce. Yield spreads are bouncing and US stock markets are negative. Those don’t hurt the case for the gold sector’s bounce.
Here is the 10 year vs. 2 year yield at yesterday’s close.
And here is the 30 vs. 5 today in real time.
So again the point is not to make any big statements (the 30-5 has failed from this condition twice in the last 6 months) but rather to give you a snapshot of a couple items that are not antagonistic to a continued gold miner bounce if one should continue.
- ISM eased again
- Corporate guidance is decelerating in line with corporate profits, as noted previously
The gold sector’s macro fundamentals are not fully in line, but do appear to be slowly marching in that direction. i.e. the big picture theme of economic contraction.
A final note is that the Payrolls report is coming up again on Friday. ADP was off today, but if Payrolls somehow rolls out a big number on the bloated services sectors, it could pop the gold stocks again (not in a good way).
So caution remains a key (esp. for non-traders) until we clear certain economic signals and put trends together. This is a bounce only and investors should realize that we will have plenty of time to get on a new trend even if from higher levels. It is still technically a bear market and that is one big bear market rule. But the case seems to be slowly coming together.