Gold Mining Stocks- Most dangerous time to own them in years?

joefridaygdxbreakingsupportloftymomentum may 27

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The rally in mining stocks since the first of the year has been very impressive.

The rally has taken Gold Miners ETF GDX up to test the 23% retracement of the collapse over the past 5-years. At the same time it is hitting the 23% level, two other resistance lines are being put to a test, with momentum at the highest levels in the past 5-years.

Joe Friday Just The Facts– With weekly momentum hitting the second highest level in the “history” of GDX, a break of support at (1), could attract a good deal of selling.

 

S&P 500- Bull Flag potentially in play, breakout about to happen?

bull fighting pic

Has the S&P 500 formed a “Bullish Flag Pattern” and making an attempt to breakout? Possible. If you are not familiar with the pattern, see more details HERE.

spx bull flag testing resistance may 24CLICK ON CHART TO ENLARGE

Unless one lives under a rock, you are well aware that that bulls nor bears have anything to brag about the past couple of years, as the market has continued to mostly chop sideways in a band between 2,150 and 1,800.

The S&P hit the bottom of the channel earlier this year and rallied strongly. Over the past few weeks the S&P has created a small series of lower highs and lower lows at (1) above. Last fall the S&P created a similar pattern and couldn’t find enough strength to breakout of a potential bull flag pattern.

Once resistance held, it fell hard for the next couple of months.

What the S&P does at (1), could tell us a good deal about where the markets stand a month from now. If the S&P breaks out at (1), it should attract some buyers. 2,150 zone remains much more important of a resistance zone, than the small falling channel at (1).

 

Gold- Two-thirds odds prices fall on a support break

gold breaking support of rising wedge may 24

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Since the peak in 2011, Gold remains in a downtrend, creating a series of lower high and lower lows.

Gold’s rally in 2016 is attempting to break this 5-year falling trend, as it is attempting to break a series of lower highs.

Over the past 6-months, Gold could be creating a rising wedge pattern. This pattern two-thirds of the time, suggests lower prices are ahead.

If history is to come true per this pattern, support needs to be taken out at (1) above. If support does give way, selling pressure could increase.

The pattern in the US$ looks almost the polar opposite (bullish falling wedge resistance test in play).

Should Gold break above triple resistance, it would send a message that the multi-year downtrend is changing.

What happens at (1), support break or resistance breakout, should send an important message for Gold going forward over the next few months.

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