As part of this 9/27 update showing upside gaps in several markets, we included GDX. We also dialed in to GDX with a 30 min. chart, including it in the trade log on 9/28.
The GDX gap is filled and now it is rubber meets the road time for gold stocks. Here is HUI (daily chart) testing the underside of its down sloping SMA 50. After the GDX gap fill the next objective is to take out the SMA 50 and just as importantly, hold above it. Then we’d want to see the September high (204.22) taken out and then the august high (215.93).
The fundamentals are improving rapidly lately, especially as gold starts to rise in ratio to inflation trades, per the update from earlier today.
The fundamentals are one thing and gold bugs selling because of declining inflation could be quite another. Maybe I am putting too much emphasis on Q4 2008, when gold miners tanked along with broad markets despite fundamentals that were screaming higher at the time (e.g. Gold/SPX, Gold/Oil, Gold/CRB, etc.) amid a deflationary impulse.
We’ll focus on the sector in NFTRH 725. I may well be too conservative right now in not ‘calling’ BUY!!!!, but it is my job to marry the proper fundamentals, which we (and not too many in the bug community) have been awaiting. My job is to advise the fundamentals (improving nicely and IMO ready) with the technicals.
Above you can see a clear technical objective at hand today. My concern is not for gold stocks or their fundamentals. That all appears on track to our plans. My concern is to not get caught up in another running of the bugs who also own oil/energy and other commodity/resources trades in abundance. That stuff should fail amid a counter-cyclical waning of inflation signals. Gold stocks should benefit, but for the same reason so many bugs buy at the wrong time, they can also sell at the wrong time.
If a real bottom is getting made at this moment we will not catch it and I will not be out there touting how I called it. But there will be plenty of time to position because the rally, when it does come, is likely to be very strong. I hold MAI.V and OGN.V and may even try to pick off another item or two, but there is no technical all-clear yet on the sector even as the funda improve markedly.