-- Published: Wednesday, 2 October 2019 | Print | Disqus
Jordan Roy-Byrne CMT, MFTA
Several weeks ago both Gold and gold stocks hit major resistance after strong but extended moves. A correction or pause was to be expected. Clearly, we can now say, the sector is in correction mode.
Corrections tend to have three legs: a simple down up down or A-B-C pattern. The gold stocks (and Gold) appear to be on the C leg of that A-B-C pattern.
Below we plot the daily bar charts for GDX and GDXJ.
GDX has a confluence of strong support at $24-$25 while GDXJ has support at $34-$35 but could fill its open gap at $32.50 to $33.00.
While it will not take another three years for the gold stocks to bust through that resistance, itís unlikely to take only a few months. It could be anywhere from a few quarters to a year.
That will depend on the fundamental developments, which we have discussed in our past missives.
For now, look for more selling in the gold stocks but then a decent rebound into November that could eventually morph into a consolidation. What follows from there will depend on Fed policy and inflation.
In the meantime, better value and new opportunities will continue to emerge. Donít panic. Instead, use this time to tweak your portfolio and err on the side of buying quality at a discount.
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