A subscriber asked how far I thought GDX and GDXJ might pull back. Well, assuming a pullback continues after yesterday’s gap fills I’ve marked up the short-term support levels at 39 (which would fill another gap) and 37, which is clear support. I am keeping a completely open mind about the sector because if the macro does go negative, gold stock fundamentals will be back on the up swing. Also, we have an open upside target of 375 on HUI.
But if GDX does continue to pull back 37 is an area toward which the 50 day moving average is rising. For a correction to be routine (much like the May-June correction) we’d not want to see a loss of the SMA 50. For a correction of greater magnitude the up trending SMA 200 is way down there around 30. I don’t expect that to be hit unless the stock market takes a significant correction and even then, I would not bet on it. But that would still be within the context of a major uptrend.
GDXJ also filled a gap yesterday and has another below, just above the first short-term support level at 53, which includes the EMA 20. The most significant support area is in the 46-48 range.
