A Closer Look at Gold Stocks; Bear Flag? Really?

So today it looks like gold and silver are rising with the inflation trade (global stocks, commodities, yields…) and our bear flag noted yesterday on GDX will be challenged. How dare they? It’s a TA pattern I tell you and it must hold true!

Mark From IKN had a good post on what a bottom in the precious metals would look like that I found interesting, especially since it would disqualify my bear flag thing. Think about it; a long-time mining sector professional who has seen enough of these events to have a mental warehouse of experience vs. a guy who drew 2 dashed lines on a chart. Ha ha ha… So again, insert here the disclaimers with regard to straight (nominal) TA not only as practiced by me, but as practiced by the whole lot of ’em. Every last one.

Here is said chart again.

gdx

I will always respect Mark’s calls because he stands by them, right or wrong.

The flag formed on declining volume (check) and yesterday’s breakdown happened on kicked up negative volume (not shown in yesterday’s post as the chart had not matured completely when I posted it) on a daily chart. But guess what, the 30 min. (day trader) chart seems to play to Mark’s case, not mine.

Note that the late volume surge was up volume, not down. Also note that yesterday’s down plunge (on mostly low volume until the end of the day) broke what had looked like a pretty damn good pattern with the price resting just above its upper support.

gdx

Here, let’s take it right to the last minute. In that final minute man, machine and/or casino patron bought it hard (or covered shorts).

gdx

So yesterday may have been an opportunity to buy more, but you have to be careful with these ‘day trader’ charts because well, you know day traders (and algos, machines and casino patrons); they can be fickle. But I will be curious to see if this has legs or if it really is just a day trader thing.

Frankly, I would like to see the daily bear flag have been a false alarm and the subject of a goofy post by a TA. However, I don’t care for seeing the sector bounce along with oil, stocks, copper and especially yields (which are not yet in a gold-positive alignment). But the fury of the mini crash last week could outweigh that as gold bugs firm their spirits.

We’ll see. Interesting stuff.

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