GDX fills a gap

We are back on the momo-fueled FOMO (or is it FOMO-fueled momo?) as the stock market correction I speculated upon was just another micro twitch to shake sentiment a bit. And with that the proper macro for a uniquely positive view of the gold mining sector continues not to be in place.

However, the sector is absolutely reviled now. Thus far I am also mistaken about the possibility of an earnings driven rally because, again, gold stocks are hated by their would-be supporters and all but ignored by the momos and FOMOs (not to mention the chart of HUI vs. the Gold/SPX ratio we’ve reviewed over the last couple of weeks showing HUI still extended vs. that indicator).

The other side of the FOMO driven momo in stocks is the bleak hopelessness of a sector like this. But you can’t just scream about gold stocks being undervalued and expect the market to care. Especially since our Gold/SPX indicator says “screw your undervaluation, they are still extended vs. an important macro consideration.”

For those seeking to position with a boat load of patience, this is all a good thing. Utter hatred. For those who would like to make and take profits in the short-term, it is not a good thing at all. Again, my view of the prospects for a rally in the nearer-term has thus far been wrong. What has not been wrong is the assertion that the sector is not and has not been right from a macro standpoint. Wanna momo? Momo AI, Semi or other select Tech areas. Wanna watch paint dry and ignominy fester? Be a gold stock player.

Anyway, here’s the state of GDX. The daily chart ticked a gap fill this morning. It’s a minor thing, but it’s better to have it gone than not. Support at 25.23 is still very key. If a lower low is made to the October low, we’re probably looking at the gap at 22.30. There are a couple unfilled (blue) gaps on the upside for consideration as well, should this pig finally start to rally.

At some point a rally is going to manifest. The question is how intense will the ignominy get first? For my part, I am going to continue as is. I’ll test the possibility of a near-term rally with my relative few positions, but also continue to manage risk through cash and play the stock market momo to a degree. Nothing has changed, and that’s the issue I suppose.

My main concerns?

• As has been the case for most of the time since mid-2020, the macro is not yet right. Macro funda matter even if many bugs close their eyes, put fingers in their ears and go “la la la… I can’t HEAR you, la la la…” to the truth.
• Another bounce took daily RSI off of its moderately oversold reading. The best buys in the gold stock sector come amid washouts, not moderate corrections.