The daily chart of GDX continues to be locked in the correction’s downtrend channel after holding the (green dotted) neckline. Below both the down-sloped SMA 50 and up-sloped SMA 200 (major trend) it has not proven anything yet with respect to ending the correction. Step 1: Take out the SMA 50 (blue). Step 2: Take out the SMA 200 and the upper channel line. Do that and you’ve got a strong signal toward the correction’s end.
RSI and MACD are negative but RSI is above its EMA 20 and MACD is triggered up. So while negative, they’ve got a good ‘look’ to them. Volume is diminishing, which is not positive for the bounce. Also there is an immediate gap from last week at 34.60. It is not shaded in, but could easily fill.
The two lower gaps from 2020 (the upper of which is a breakaway gap that reasserted the uptrend) would fill in the event of the less probable outcome of a ‘higher low’ crash to test the March crash. If that were to happen it should be looked at as a significant opportunity because it would be the final capitulation of the hangers-on bugs.
A loss of the neckline would bring on a test of the strong support zone that coincides with the lower trend channel. That could also be a significant buy opportunity if it comes about and if it turns out to be the low.
GDXJ is also locked below the down-sloped SMA 50 and the up-sloped SMA 200. It too has a fading volume problem but sneaky good looking RSI and MACD. If GDXJ could take out 54 it could be sent on its way. Step 1, however, would be to take out the converged moving averages.
Meanwhile, with the correction’s channel is intact, the strong support zone continues to be viable with a less probable crash objective to fill the lower gaps.
Bottom Line
We should play it straight, understanding that technically the gold stock ETFs and indexes are still in correction mode. At the same time let’s not overreact to discussion of downside possibilities. There are upside ones as well and we’ve got our parameters to the upside and the downside.
A positive factor is that many individual gold/silver mining stock charts look good. It’s the large caps that are weighing the ETFs (and yes, GDXJ holds some relatively larger caps).
The larger correction could end at any time but as yet, calling an end to it is premature.
