Last week, I suggested “We may be getting close to another chance to buy into the gold stocks.”
The VanEck Vectors Gold Miners ETF (GDX) was sitting on the support of its 50-day moving average (MA) line. That’s usually a lower-risk area at which traders can add exposure to the gold sector in anticipation of a bounce.
And, we got a really nice bounce. GDX traded as high as $22.84 per share on Wednesday. That’s a gain of more than 4% in just one week.
But, yesterday, the gold sector took a nasty tumble. GDX lost 2.4% in one day. And, the technical picture – which held such bullish potential last week – looks a little bearish today. Take a look…
GDX fell below its February low last week as it tagged its 50-day moving average line. It bounced strongly off of the line – which is a good thing. But, the bounce failed to get above the February high (so far).
So, the chart now shows a lower low and a lower high. That is the definition of a downtrend. GDX needs to reverse course, soon, and rally above the February high of $23.40-ish, in order for this chart to take on a more bearish look.
Astute readers might also note the burgeoning appearance of a bearish head-and-shoulders pattern on the chart. That’s something we’ll discuss when and if it develops in the coming days. For now, dear reader, just know the chart looks more bearish than bullish at this point.
If you bought into the gold sector last week when GDX was testing its 50-day MA, then you have two choices today. You can cash out now, take the modest one-week profit, and move to the sidelines until the technical picture becomes clearer.
Or, you can hang on and see if GDX can turn around and rally above its February high. In that case, I’d recommend keeping a stop-loss at last week’s low of about $21.50. A break below that level would create another lower-low and likely lead to even more selling pressure.
Best regards and good trading,
Jeff Clark
Reader Mailbag
In today’s mailbag, a couple of Delta Report subscribers share their wins…
I have only recently re-joined your service and I’m pleased to report the two suggestions I have taken so far have been nicely rewarding. I’m now in another trade, which is showing a good profit since last week.
– Anthony
Jeff, I actually did pretty well on a recent trade. I came into it a bit late and bought as the price was much cheaper. I sold it on Friday for about a 150% profit. Keep up the good work. I’m only two weeks into your service and I’m really enjoying it.
– Cameron
Did you buy into the gold sector last week? How are you trading gold right now?
Thank you, as always, for your thoughtful insights. We look forward to reading them every day. Keep them coming at [email protected].