Thursday, July 24, 2014

Sell signals approaching for gold stocks

I've been saying for the last couple of weeks that the highs we have hit on the GDXJ will likely be the extent of the rally. A couple of weeks ago we opened at a high of 46.50 and reversed back down 3 points to close at 43.50.  That was the first warning sign that the rally might be halting.  Since, we have proceeded to consolidate under that level.  Today, gold once again broke below 1300, and the gdxj sold off nearly 5% to close just above the low of the consolidation range which sits at about 40.  Watch that level very carefully, a break below 40 surely spells out a continued decline to test the support levels of 38, 36 and possibly even 34.  So long as it is able to remain above 40 though, then the bears haven't completely gained control.  There would still be a chance we rally back to the highs and even break higher,  but as I have been saying, I think it is unlikely.   In the event of a break below 40, you have the opportunity to hedge the profits you made going up by opening a small short position.  Buying an etf such as dust or jdst is an effective way to do this.  This pullback will likely find its bottom in August, and begin to rally back going into September,  which historically is a good month for gold.  This will likely be the last pullback in gold stocks before a massive rally that will likely see a lot of junior miners double, so stay focused because opportunities like this don't come around too often.  Onto the chart, you can see the consolidation zone's support and resistance points at 40 and about 46.  The moving averages haven't quite crossed over, and macd is still hanging above the zero line, but a breach in price below that 40 level and all that will change.  Watch carefully. 

-Jonathan M Mergott

Friday, July 11, 2014

This is what I've been waiting for

Yesterday was a big intraday reversal in the gold miners, that happened right at the same level it did during the last rally.  The GDXJ gaped open yesterday  to about 46  and began to lose all of it as the day went on.  It closed in the 43 area.  This is precisely what I was expecting to happen which is why I haven't been buying this move higher.  This rejection will at the minimum cap prices until a big move higher on good volume can blow it away, but I think this consolidates in this low 40 level for another week or so before breaking below 40 settling in the 36-38 region.  ('d guess by mid Aug)  Watch the MA's for cross overs.  We are still in a buy signal, but that reversal is likely a game changer.   Don't get discouraged, as far as I am concerned, all this means to me is  more time before the move explodes.  I would much rather buy the GDXJ near 36 than 46 anyway.  Here is the chart.

-Jonathan M Mergott

Wednesday, July 2, 2014

4th of July

Quick note just to alert everyone to my mode of thinking here.  We have an abbreviated trading week due to the 4th being on Fri so the NYSE is closed.  Thursday is a half day, and we also have the jobs report.  With the low volume on the holiday, the fact that were in the dead of summer which is not a good time for most markets, and the jobs report fiascoes we deal with all the time, don't be surprised if gold is hit hard tomorrow.  It seems almost too easy from the other side of the coin, so watch that.  That's all, have a happy 4th and enjoy the short week, I myself am having a BBQ and watching the fireworks and I can't wait to do it, so I will leave the market watching for the next few days to whoever feels compelled to do it, but it won't be me.  :)
Update,  heres a  chart of the last 5 min in the gdxj.  Smack.

-Jonathan M Mergott