A healthy gold stock correction
Let’s take a look at a rarity for me; a public article discussing a nominal technical situation rather than bopping you over the head with macro fundamentals and macro indicators. We review technicals in gold stocks and other markets weekly in NFTRH, and not so much publicly because straight TA is the compass we use to navigate what the macro tells us. In other words, it is for subscribers to gain perspective and parameters ahead of time, not for me to regale the public with.
The correction is healthy if you were prepared for it. We were. In NFTRH reports and in NFTRH+ updates like this one during the trading week, we anticipated a correction with most of the rally complete but also with an open question as to whether at least one GDX upside gap would fill first. It turned out it wouldn’t, and that is a good thing. Those upside gaps will be handy targets after the short-term correction plays out.
Below is the current version of the chart from the update linked above. As of Thursday night GDX rests right on the initial support we reviewed in advance. But a better scenario is for a downside gap fill below 29 and potentially a test of support that coincides with the 200 day moving average in the 27-28 area. Support could hold here, and indeed GDX could bounce to fill the gap it left last week at 31.42.
As a side note, check out the Golden Cross that showed up as if on cue in the Bug-o-Sphere as a bullish signal. Well, a cross of a shorter-term moving average above a longer-term one is by definition, bullish. But back on January 24 this post warned about the interim bearish implication and sure enough then came the pullback. The theory being that scores of self made TAs see things like that and react to them.
Again, it’s good to get this reaction in GDX. It’s healthy. It’s never a bad time to clean a sector with supporters as ardent as those of the precious metals. But provided the macro plays ball as it generally has been, the correction is a buying opportunity and we’ll be keeping a close watch on quality miners and royalty companies in NFTRH.
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