GDX has filled the first upside gap

The daily chart of GDX shows the January 16 down gap being filled this morning. When projecting a bounce/rally we ID’d it and the one just above it as reasonable objectives for a tradable rally. But GDX has taken out both the 50 and 200 day moving averages and while at resistance here and now, is eyeballing gap #2. At that point, if it fills, an overbought situation would be in place. Traders take note.

But if this is a launch to a new phase, traders should be nimble and watch for buyback on pullbacks, because if the train is leaving the station it may not slow down enough for another deep buying opportunity. I am generally planning to hold, with hedging – and all its inherent frustration – as needed.

See bullets after the chart for more thoughts.

• This has been a frenzied spike from an oversold, contrary positive (over-hated) sentiment position.
• While certain macro fundamental indicators (Gold vs. Inflation Expectations, pullback in yields, etc.) have postured to improve lately. This is still a work in progress.
• A frenzied spike off a low is different from a frenzied rally off of already over-bullish readings (like with the stock market). The former can be considered a launch to a new phase while the latter could be considered the ending stages of a mania.
• If both of those are the case we will have the new macro we have been stalking. But the proof is not yet in the pudding with a top in the stock market (or a confirmed trend break in Gold/SPX, which is bouncing hard).
• As yet, the miners are rallying with the broader ‘inflation trades’ and/or anti-USD trades. So, not yet unique, which does not mean the rally cannot continue.
• Bigger picture, gold stocks are firmly in the corrective channel from 2020 and would not exit that unless HUI were to hit the 300s (current: 228). Meanwhile, what a rally it would be even if it were to only test the upper trend line of the downtrend channel.