Gold stocks are about to start their next rally phase. We just need one more indicator to fall into place.
Look at this chart of the VanEck Vectors Gold Miners Fund (GDX)…
Normally, we use the moving average convergence divergence (MACD) indicator as a way of measuring the strength of a trend. We often look for divergences between this indicator and the price action to warn us of a possible reversal in price.
In the gold sector, though, we don’t often get positive or negative divergences in the MACD indicator. The sector is probably too volatile, too emotional, for the MACD indicator to work the way it does for other sectors.
But it can still be a useful indicator.
Look at the blue circles on the GDX chart. These circles indicate when the short-term moving average (the black line) crosses above the longer-term moving average (the red line). The blue circles on the GDX chart show where gold stocks were each time the MACD crossover occurred.
On all three previous occasions this year, the MACD crossover marked the start of a strong rally in the gold sector. We got another MACD crossover yesterday.
If it holds – meaning if the black line doesn’t cross back down below the red line today – then gold stocks should be ready to rally from here.
Last week, I suggested the gold sector was preparing for another rally because the Gold Miners Bullish Percent Index (BPGDM) had turned higher, and the GDX/Gold ratio chart had bounced higher as well.
If you bought gold stocks last week, then you’re in good shape today.
But, if you’ve been waiting for a stronger signal to get back into the gold sector, this MACD crossover should do the trick.
GDX closed yesterday just below resistance at about $23.90. If it can break above that level, then GDX may be headed quickly back towards the September high of $25.50.
Best regards and good trading,
P.S. Will you be trading this bullish sign for gold stocks as we head into the day’s action? Let me know your thoughts, as well as any other questions or suggestions, right here.
For today’s mailbag, readers respond to yesterday’s essay on retail’s second wind…
You are correct that retail stores need to make shopping an experience or satisfying and provide excellent customer service. Being older, I remember the old department stores where you could find what you wanted or someone would help you find it. Another thing I find disconcerting is stores moving things around. I like the familiar, I'm not sure it helps sales but it must cost in design and labor. Must be a job security thing.
I'm not sure about Penney's, haven't shopped there in some time. But Sears may be doomed. I stood in the checkout line for a long time, and there were two cashiers and not another employee in sight. When I spoke to the cashier, he was quitting— it was his last week.
As far as grocery stores, I do like the market but what I have found is the markets choose what they want you to buy. Many of my favorites have been discontinued. So I buy them on Amazon. Recently I went into a Ralphs (Kroger). This was a new thing as I have shopped at that store before. The shelves had to have been 8-10 feet high. Duh! Who can reach that high? And God forbid we have an earthquake. It was very disconcerting and overwhelming. It made me feel uncomfortable. I'm not sure if I should chalk it up to being more “mature” or if it disconcerts younger generations too. Thanks for letting me vent.
Right on, Jeff! Agree with you. Nor can Amazon kill organic grocery although it will be interesting to see how the WFM buyout works. There's no way I'll let anyone else choose my fresh produce, or pick out a fish fillet, or sack up a couple of pounds of organic oats, beans, rice, etc. Would you let a robot choose your next prime rib steaks for the grill? Thanks for the Market Minute we receive daily. I appreciate receiving your daily heads-up.
Yup. I shop at JCPenney. Love it. For life. I hate Bezos. I hate Amazon. Actually, I hate the internet. Life was far better and safer before the internet. Not even close.
Sorry Jeff. I think you are wrong about retail. It used to be that way—shopping with kids, or for the experience. But not so much anyone. Stores at the mall are about deserted and you can’t find anyone to wait on you or check out. Stores are in disarray due to not many employees like there used to be. I had much rather watch something on TV such as QVC than go online to buy or just shop online. If you know your size or look at their charts it is easy and fun.
It takes too much time and traffic hassle to go to the malls nowadays and sometimes not safe. And it shows up at your house in a couple of days. I like that. I do about all my shopping online for everything.
I appreciate your common-sense approach to things that goes beyond the ability to interpret numbers and charts. I read another stock market newsletter in which the advisor was calling for “the death of retail.” According to him, malls will become huge empty spaces where businesses will all die. It seemed a little far-fetched, and for all the reasons you enumerated. But it's good to hear someone such as yourself present what seems to me to be a more realistic view.
We humans thrive on social interaction and shopping is part of our daily experience. Thanks for the reminder.
I agree with your Market Minute analysis on retail. I’ve thought about this off and on since last spring, when Stansberry analysts were discussing Amazon vs. brick-and-mortar retail.
I conclude brick and mortars will continue to thrive in US cities where the drive isn’t so far for suburbanites as it is out in the country. I live 0.5 to 4 miles from all major retailers, pay a premium for this central real estate location, and prefer to shop at stores if I need to compare and consider similar products, read the labels, ask for advice, or see what a product looks like up close.
And a mall is still an option to entertain guests in town. I also note close families still enjoy going to the mall as an outing. I recently observed a lot of foot traffic (shoppers) at my Fort Lauderdale Galleria and the urban mall at the base of the tallest high-rise in Latin America in Santiago, Chile… So the kind of shopping and dining experience matters, and that’s a human preference.