Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Stocks Rolling Over to Early Summer Low

Commodities / Gold and Silver Stocks 2014 May 09, 2014 - 09:52 AM GMT

By: Jordan_Roy_Byrne

Commodities

Last week we speculated that a decline in May would create an opportunity. We concluded: The near term prognosis looks cut and dry. Until proven otherwise the short-term trend is down. If that is confirmed in the coming days then let these markets fall to strong support before buying. The Ukraine-induced alleged safe haven bid for Gold could be starting to come out of the market. Regardless of the cause, the charts for the miners (and Gold) continue to urge caution as lower prices are likely ahead before the next major turn.


GDX and GDXJ (shown below) have had a very weak respite since the end of March. Both markets failed twice at their 50-day moving averages. The second failure occurred a few days ago at now declining 50-day moving averages. The markets reversed before even touching the moving averages. The path of least resistance is definitely lower.



We strongly believe the next low for GDX and GDXJ will occur at or very close to the December 2013 lows and it will be a major low, similar to the June 2013 and December 2013 lows. Its presumptuous to say but not when you take into account the next chart, which many of you have already seen. This chart helped us spot the last two major lows. It may not tell us where the next low will be but it strongly argues that the next low will likely be the final low in this arduous bottoming process which is already in its 11th month.



So how could this next bottom play out? No one knows for sure but we'll take a stab at it in this next chart and point out a few things. Note how the 200-day bollinger bands were far apart when GDXJ first peaked in 2011, yet tightened before GDXJ began to breakdown. Currently, the 200-day bands are far apart and GDXJ is yet to touch either side. Perhaps GDXJ will touch the lower band next and then a months later touch the upper band. These bands will need to pinch in before GDXJ attempts a major breakout. Volatility continues to be low as demonstrated by the ATR indicator. It is declining and near a multi-year low. Until that reverses, don't expect any huge breakout in GDXJ.



With respect to our projection, let's keep in mind that GDXJ rebounded 59% in two months in summer 2013 and recently surged 53% in less than two months (from late December to mid February). Our past historical work shows that the large cap miners usually recover 50% in four to five months after the bottom. Hence, a move for GDXJ from 30 to 50 (more than 50%) in four to five months would be inline with historical tendencies.

One security I am looking at is JNUG the 3x long GDXJ ETF. This is essentially an option on the already volatile GDXJ. JNUG is super volatile but the upside potential is tremendous. During that less than two month period in which GDXJ surged 53%, JNUG returned 210%! I am looking to buy that in the coming weeks when the downside risk becomes very low. I am also looking to buy several juniors I believe have exceedingly strong upside potential over the coming quarters and years. In any event, be patient over the coming weeks and let this final selloff run its course.

If you'd be interested in professional guidance in this endeavor, then we invite you to learn more about our service.

Good Luck!

Email: Jordan@TheDailyGold.com
Service Link: http://thedailygold.com/premium

Bio: Jordan Roy-Byrne, CMT  is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2013 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor.  Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.

Jordan Roy-Byrne Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in