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Picture 1: GDX Advance/Decline Line & GDX
Here we plot the advance/decline for GDX. The A/D line is the holy grail of breadth indicators. It tends to be a reliable indicator as it shows us the overall participation in that market. A strong market needs strong participation.
The A/D line was relatively strong into February but it took some real damage during the last selloff. Now the 50 & 200-dma's for the A/D line are in the same spot and are flat. GDX and GDXJ look similar although their 50-dma's are not quite as close to their 200-dma's.
Anyway, the key here for bulls is the A/D line needs to push above that moving average resistance. The risk for bulls is we get a rally in the sector but it fails and reverses course at the 200-dma's. The GDX A/D line is already showing some weakness as it barely budged during the post Fed explosion. If the sector fails again at its 200-dma's and that is confirmed by a weak A/D line, then it could lead to another dump lower.
Saturday evening we emailed subscribers a 34-page update in which we discussed the short-term upside potential in the precious metals complex but also the medium term downside potential. In our conclusion we noted the two scenarios at hand and a key level in both GDX and GDXJ which would be held over the next few months in the bullish scenario. Our view is we see short-term upside potential but we are skeptical that miners will rally to their February highs.
The update included a report on a junior exploration company that has been a big winner for us. It is up 79% since we bought it a few months ago. The company has a growing resource and appears to have an economic deposit. Its CEO is very experienced and sold a company at his last job. The stock is acting well but we noted the prices it could be bought (with lower risk).
In the update we also included a table that shows key support for most of our holdings as well as the prices we would buy these stocks. It is actionable for subscribers and especially new subscribers, who can immediately learn our favorite companies and target buy prices.
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Disclaimer: This newsletter is intended for informational and educational purposes only and should not be considered
personalized and individualized investment advice. Investment in the precious metals sector contains significant risks. You should consult with an investment advisor and do your own due diligence before making any investment decisions. This email may contain certain forward looking statements which are subject to risks, uncertainties and a multitude of factors that can cause results and outcomes to differ materially from those discussed herein.
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