The gold and silver mining stocks are starting to play catch up with the metals. The recent run could be the beginning of a phase where the miners outperform their underlying metal. Time to take a closer look at GDXJ – Market Vectors Junior Gold Miners ETF.
Somehow the file upload doesn’t work. So you need to go to my public list to see the the chart:
GDXJ – Junior Gold Miners ETF Chart
As you can see in the chart, it looks like we are in the process of building a bullish pennant. Price is trading above the MA 200 but is basically still hugging it. Separation from the MA 200 and increasing volume on resumption of the recent thrusting move would imply a further gain of at least 10%. That would coincide with the upper boundary of the trading channel. So far most gold related charts look very constructive. An exception would be LSG.TO – Lake Shore Gold which is literally getting killed. Long-term readers know this name as I had a very profitable trade with WTM.TO – West Timmins Mining before it ultimately merged with Lake Shore Gold.
This goes to show there is always ‘single stock risk’ no matter how well a sector does. Trading an ETF like GDXJ or GDX for that matter is a great way to avoid that kind of risk. It would also be a way to put on a somewhat bigger position without losing sleep over it.
Some market thoughts:
The S&P is still trading within its trading range. Although we have seen good follow through it is too early to call for an upside breakout. Some individual stocks I use to gauge market strength are starting to display increasing signs of weakness and are threatening to roll over and break down. APKT – Acme Packet and ARUN – Aruba Networks, both are on my public list, would be notable examples. Again, it is too early to tell where the market is headed. It could be those two stocks are giving us early warning signs that all is not well. On the other hand it could simply mean that they have done their job as market leaders and healthy rotation is at work paving the way for new market leaders to emerge and take over. On another note, IPGP – IPG Photonics is not exactly weak but not as strong as I would have expected considering the fact it hasn’t been a leader for such a long time. Just a thought.
The key to staying on top of the stock market is not predicting or knowing what the market is going to do. It’s knowing and understanding what the market has actually done in the past several weeks and what it is currently doing now. – William J. O’Neil
My public list with all my charts can be viewed here:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469
Buenas noches!