Technical Analysis Thoughts On NYSE Listed GDX Market Vectors Gold Miners ETF

by Olivier on June 18, 2010

Today brought us another low volume up day with the big cap names in the precious metal sector. As I outlined yesterday, price is king and Silver broke out of the bullish flag chart formation. When volume doesn’t confirm price though, this raises a red flag. That’s when you want to closely monitor moves within the sector and be cautious.

That being said GDX – Market Vectors Gold Miner ETF, GDXJ – Gold Junior Miner ETF, GG – Goldcorp and a few others I mentioned yesterday are lacking volume on the up move. What is particularly worrisome is the fact price gapped up two days in a row. One could argue first signs of exhaustion are starting to show up. The gaps and the low volume can clearly be seen on the GDX chart below:

GDX NYSE Market Vectors Gold Miners ETF Technical Analysis Stock Price Chart

Up-to-date GDX – Gold Miners ETF chart on my public list.

To quote the annotation on the chart, next week will be telling. Judging from the volume action we will probably need to pull back first before we can stage a significant rally. When you spot these kind of divergences it is usually a good idea to wait for entries with better technicals as opposed to blindly jumping in and initiating new long positions.

Believe those who are seeking the truth. Doubt those who find it. – André Gide

My public list with all my charts can be viewed here:

Buenas noches!

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