A Little Gold Miner Micro Management

GDX got volume last week after the Fed rode off with its latest rate hike. But it gapped up on Friday’s market angst. Frankly, I was surprised to see it positive yesterday with the big stock market bounce. Well, today the gap is in view and it seems GDX has its sights on filling it.

RSI is good, MACD is decent and the sector is trendless although ADX DI+ is above DI-. AROON, not shown on this chart crossed to a daily up signal last week (in similar fashion to its signal on the 2nd chart below).

Beyond the scope of this daily chart, the noted support area goes back about a year as part of the consolidation that began in 2nd half 2016. The miners are still obviously in that consolidation but have my attention because of their counter-cyclical characteristics as the market gets, err, volatile.

gdx

This chart shows the GDX/SPY ratio, which probably got a little too peppy last week and has been settling down this week. You can see the relative downtrend is not yet broken, but if GDX/SPY and GLD/SPY were to break their trends the sector would start to get the attention it gets when the going gets rough elsewhere.

gdx/spy

Oh and to answer a question I got today, the stock market does not need to go down for the gold sector to go up. But the stock market does need to go down in relation to gold. Remember the old Dow/Gold ratio stuff from last decade? It is our modern day Amigo #1 (SPX/Gold). That Amigo needs to turn, regardless of whether or not nominal stocks go down.

[edit] Add GLD/SPY for reference. It’s much closer to breaking trend than GDX/SPY. Just turn that SMA 200 up, test it and off ya go ancient relic! Too much to ask? :-)

gld/spy

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