Don't Ignore This Chart

Gold Finally Breaks Out With The Miners

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Investing in Commodities has been tough for the first 1/2 of 2017. Every rally was a false breakout and every opportunity seems to have dried up. From Agriculture, energy, precious metals, industrial metals, steel, copper and cocoa, it has been a hard spring for trading from the long side. Today, Gold gives us a glimmer of hope that this may be changing. The miners alsolutely soared today up 4.5% in the GDX ETF. The volume was even more impressive with 98 million shares today with an average of 55 million normally. 


While this is very bullish and the breakout is a buy signal, I do want to add one word of caution. I typically like Gold stocks from the 25th of the month to the 8th of the new month. On the chart below we can see 7 months where the 8th or very close to the 8th of the month has marked the highs through the last 11 months.

I have noticed recently that more and more Precious Metals companies had high SCTR rankings even before today's breakout. We can see 7 that had big changes in their SCTR rankings today. I used the Canadian miner SCTR's as there are so many in Canada it represents the industry a little better.

I also like it when the ratio of Gold mining stocks outperform Gold to break a trendline on the ratio.

Watch closely, I think this looks nice for a big move.

On the weekly chart (GLD) also has some lustre. A weekly chart needs a weekly close not a Tuesday close, but this looks very good here.

Good trading,
Greg Schnell, CMT, MFTA.

 
 

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Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. Based in Calgary, he is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is also the author of Stock Charts for Dummies (Wiley, 2018). Learn More
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