Out Fox the Golden Bear in Gold Stocks

We first want to look at the weekly charts on the GDX before going down to the Daily.  After breaking down from a Megaphone top formation, the GDX continues to remain below the neckline.  Unless price action can close above the $48.50 area, then the downtrend in the gold stocks will continue. The Weekly remains on a sell signal with a possible target in the 40 to 44 zone.  If we close below the 46 support level, then lower prices are just around the corner.

After looking the weekly charts, we then want to move on to the Daily.  In early March, the GDX broke its uptrend and the TRIX crossed over to the downside.  Like the Weekly, the Daily also remains on a sell signal. If the GDX can break its downtrend, then it could be possible that the GDX has put in a bottom.  The first step would be a breakout above 47 and then continued price movement back above the neckline at the $48.50 zone  Watch this closely next week to see if the trend line can be broken to the upside.  The TRIX did turn up for a bullish cross on Friday.  We only use this as a secondary indicator.  The price action on the GDX still needs to tell us that a trend reversal is in palce.  We will not know if the Weekly charts have bottom for several weeks, but like we stated above, any close above the neckline could be a false breakdown and we could start to trend higher.

Daily GDXJ / GDX Ratio:

On a positive note, the Juniors continue to show positive relative strength vs the Majors.  Usually the Juniors will lead the Majors down in a more risk adverse environment.  This could be an early indication that a trend reversal is right around the corner.

Daily Dow Jones Gold Mining Index:

The Dow Jones Gold Mining Index broke down from a bearish flag in early March.  The index has completed a ABC down which measured to around the 104 level. The DJUSPM Index remains on a sell signal.  Another development last month, was the Death Cross of the 50 and 200 ema's.  For now, the risk remains to the downside.

Daily GLD:

We still remain on a sell signal for gold.  We decided to redraw our trendline is it more actually the current trend. We did see a cross on the TRIX this week, but we still need to break the current short term downtrend.  Lets see how this next week turns out for the yellow metal.

Daily SLV:

Silver also remains on a sell signal but could be close to a change in trend.  Still to early to tell.  So far silver has been acting stronger than gold.  Short term support is the pink trendline on the chart.  If that support fails, then Silver could fall to the 28-29 level.

US Dollar Index:

We then want to take a look at the United States Dollar.  Our view on the U.S. Dollar's is currently neutral with a slight bullish bias.  The U.S. Dollar has been consolidating between 78 and 81.50 over the last several months.   Unless the 78 zone is breached on the downside, the US Dollar looks like it wants to trade higher for the time being.  We have a short term target at 81.50 and a longer term target of around 87.  If the US Dollar index breaks the 78 then those targets will be null and void.

Our Proprietary GDX Semi-Automated Trading System:

This week our GDX Semi-Automated system officially closed out its 9th positive trade in a row for a gain of more than 13%.

Key Statistics:

• Up 90% in the last 12 months and more than 308% in 3.5 years
• On the long side, only 2 negative trades over our trading history
• 61 winning trades vs. 13 losing trades for a profitability rating of more than 82%
• Profit Factor of over 10

Please consider becoming a new member. This system is nothing short of amazing, with gains over the last 12 months of more than 90% and more than 308% over the last 3.5 years. I would like to thank our paying subscribers and congratulate them on another successful trade. For more information, you can visit our GDX Systems page at the following link to view statistics and past performances on this one of a kind system.  All system information has been updated with the latest results on our website.

XAU / SPX Ratio:

The above chart is the XAU to SPX Ratio.  We are getting into an area where we have seen the gold stocks bottom in the past, but this doesn't necessarily mean that it will.  We use this indicator as a secondary indicator and do not trade off of it.  Basically what this indicator states, is that the gold stocks have been underperforming the general market for quite some time now.  This is just another pause in this on going bull market in gold.

Overall Summary:
Over the last several weeks, the technical damage has been done on the gold stocks.  The overall trend is still down, but we are getting into areas where the gold stocks are becoming very cheap.  It doesn't mean that they cannot get cheaper.  If the GDX can get back above the neckline around $48.50 and close above it on a weekly basis, then a bottom could possibly have been formed. 

Until next week, so please stay tuned.