-- Published: Wednesday, 13 February 2019 | Print | Disqus
By: Jordan Roy-Byrne CMT, MFTA
Gold stocks have to do more to confirm they are in a new bull market.
Sure, they’ve surged above key moving average resistance and breadth has improved.
However, the gold stocks have not yet broken the pattern of lower highs and breadth, while improved, is not at bull market levels yet. Let’s review where things currently stand.
In recent weeks GDX and GDXJ surged above the critical 400-day moving average which has been an excellent indicator of the primary trend dating back to 2012. That’s positive and hasn’t happened since the summer of 2017.
At the bottom of the chart we plot Silver against the S&P 500 and according to the 200-day moving average, that relative trend has turned in favor of Silver.
The bottom line is if GDX, GDXJ and Silver can maintain the lows from last week and firm up against the S&P 500 then they are likely going higher. If those lows break convincingly then look for a longer and deeper correction.
Essentially, should a bullish consolidation develop, we will prepare to put more capital to work. If not, then a deeper and longer correction is more likely which means we can be patient.
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