Gold Mining Stocks Technical Picture Has Significantly Improved

by Olivier on November 8, 2011

T he technical picture for the gold mining stocks has significantly improved. There is simply no other way to interpret recent price action. It still isn’t an all clear, blue skies type of situation, but the technicals imply higher prices ahead. The key thing to monitor is how individual stocks deal with the vicious gap down that occurred a while back. Strong big cap stocks like NEM, RGLD, IAG and GOLD have  already closed that gap and lots of miners are trading at new all time highs. This is bullish technical action. We need more miners to close those gaps and we need GDXJ to outperform GDX. That would be a picture perfect bullish scenario.

As of yet I am still mostly in ‘low exposure’ and ‘capital preservation’ mode. I still don’t see a lot of set-ups that make me want to be overly aggressive. It sure looks like the gold mining sector is about to offer good trading opportunities for the next few months.

On to the markets with a quick bullet type overview:

  • Gold Miners: Technicals are improving.
  • Colombia: Colombian gold miners are heating up. CBJ.V – CB Gold is my favourite play.
  • Paper / Pulp: TMB.TO looks like it is about to build a double bottom. Another swing lower and then moving back up might make me want to go back in.
  • Uranium: DNN looks like it is about to break a significant downtrend line. Overall I still think there is more consolidation ahead. I’m neutral / slightly bullish.
  • Short candidates: AAPL still looks like a great short candidate here.
  • Gold: Physical gold is starting to move back up. Gold in Euro terms is almost trading at its all time high. The bull market goes on.
  • Silver: Technically less compelling than Gold. Once gold really starts to power higher, silver will follow suit.
  • Natural Gas: LNG and MG look great here. WPRT my former favourite is simply not as strong as I would have expected. Another few weeks of consolidation and LNG might set up for an explosive move to the upside. The stock is risky though. Timing is everything with that one.

Right now I am spending lots of time with computer and software issues as I am upgrading my systems and adding an iMac to my existing PCs. Website updates might be less frequent than usual this week.

Remember to be very selective with your trades. Keep in mind Darvas’ and Mamis’ advice to focus on ‘new stories’, especially those that are trading near or at new all time highs. Don’t go for fallen former leaders. Go for strong charts. Get exposure to new leaders.

The one eternal aspect of every market top is that it occurs before we’re ready for it. – Justin Mamis

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

Buenas noches!

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