Mining ETFs: Headed For Their Next Slide?

Consequently, it makes sense for the GDX ETF to slide from here, as the corrective rally that was likely to take place is most likely already over.

The clearly visible sell signal from the stochastic indicator (lower part of the chart) confirms the above as well.

Having said that, let’s take a look at an even bigger decline in the GDXJ ETF – proxy for junior mining stocks.

ChartDescription automatically generated

While senior gold miners declined 2.54% yesterday, junior miners declined by 4.04%.

The remarkable thing about both declines is that they took place almost without gold’s help. GLD ended yesterday’s session just 0.73% lower. The general stock market – another market that could temporarily impact the prices of mining stocks – declined by 0.76% yesterday.

In comparison, the declines that we saw in both proxies for mining stocks were huge. This is very important because the recent declines in the precious metals sector and the recent rallies in the precious metals sector were preceded by – respectively – the relative weakness of miners compared to gold and the relative strength of miners compared to gold.

What we saw yesterday is a crystal-clear sign that the waiting for the next big move lower is over.

This month’s “buy” signal from the MACD indicator seems to have once again marked a great shorting opportunity. On March 12, I wrote the following:

The above chart is a big red warning flag for beginner investors. The flag reads: “verify the efficiency of a given tool on a given market, before applying it”.

The bottom part of the above chart features the MACD indicator. Normally, when the indicator line (black) crosses its signal line (red), we have a signal. If it’s moves above the signal line, it’s a buy sign, and if it moves below it, it’s a sell sign. 

But.

If one actually looks at what happened after the previous “buy signals” in the recent months, they will see that in 5 out of 6 cases, these “buy signals” practically marked the exact tops, thus being very effective sell signals! In the remaining case, it was a good indication that the easy part of the corrective upswing was over.

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Disclaimer: All essays, research, and information found on the Website represent the analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong ...

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