This is where traders should buy gold stocks
From Jeff Clark, Editor, Jeff Clark’s Market Minute:
This is where traders should buy the gold stocks.
Three weeks ago, I pointed out the intermediate-term trend in the gold sector had turned from bearish to bullish. The VanEck Vectors Gold Miners ETF was trading above its 50-day moving average (MA) line. And the 9-day exponential moving average (EMA) was on the verge of completing a “bullish cross” above the 50-day MA.
These are bullish developments that usually indicate the start of a new intermediate-term rally. As long as GDX holds above its 50-day MA, then gold stocks should move higher.
For the past three weeks, though, gold stocks have struggled. GDX closed Wednesday at its lowest level since early October. And based on the emails I’ve been receiving this week, that action has a lot of traders wondering if the recent breakout in the gold sector is really a “fakeout.”
I don’t think so.
Here’s an updated chart of GDX…
After bottoming in early September, GDX has put together a series of higher lows and higher highs. That is the definition of an uptrend.
While the sell-off last week has been tough for gold bugs to endure, the low of this move is still above the low from three weeks ago. So, the uptrend remains intact.
More importantly, GDX remains above its 50-day moving average line. And, the 9-day EMA remains above the 50-day MA. So, GDX remains in a bullish pattern.
So, I’m going to end today’s essay with the same two sentences I ended the essay on October 12…
“There will be pullbacks in this intermediate-term rally, for sure. But, traders should use any pullbacks toward the 50-day MA as a chance to increase exposure to the gold sector.”
Best regards and good trading,
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