Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Mining Stocks on the Cusp of a Major Rally

Commodities / Gold and Silver Stocks 2013 Feb 21, 2013 - 05:02 PM GMT

By: GrowthStockWire

Commodities

Jeff Clark writes: Mining stocks have suffered a rough few months.

Ever since running higher into September last year (a rally that allowed traders to take profits on several gold-stock positions) the mining sector has been trending lower. And the past month has been particularly brutal for the group...



Despite the strong rally in the S&P 500, gold stocks – as measured by the Gold Bugs Index ($HUI) – are down 17% so far in 2013... and have suffered a big 28% drop since the sector peaked last September.

We've seen this story before. Early last year, for example... as the broad stock market rallied, the mining sector reached ridiculously low valuation levels. Investors soured on the group. They sold off mining shares and chased overbought stocks even higher.

When the broad stock market declined in May, the mining sector bottomed and the Gold Bugs Index rallied 20% in just two weeks. We are setting up for a similar sort of rally once again...

An intermediate-term bottom for the gold sector may still be as much as a few weeks away. But make no mistake about it, we are on the cusp of a major rally in mining stocks. Take a look at this chart of the mining sector bullish percent index (or "BPGDM")...


A bullish percent index is a gauge of overbought and oversold conditions. It measures the percentage of stocks in a sector trading in a bullish technical formation. Since it's measured as a percentage, a bullish percent index can only reach as high as 100 or fall as low as zero.

A sector is overbought when its bullish percent index rallies above 80. It's oversold when it drops below 30. On Tuesday, the BPGDM closed at 16.67 – deep into oversold territory. When it turns higher from here, the BPGDM will generate a buy signal – similar to the signals marked by the blue arrows on the chart.

Here's how the gold sector performed following each of the previous BPGDM buy signals...


Five of the six BPGDM buy signals over the past two years marked intermediate-term lows for the gold sector and were followed by significantly higher prices. During the one exception, in April last year, gold stocks fell even further. But they did eventually trade for higher prices a few months later.

So keep an eye out for a BPGDM buy signal. It will mark the start of the rally in gold stocks.

Best regards and good trading,

Jeff Clark

http://www.growthstockwire.com

The Growth Stock Wire is a free daily e-letter that provides readers with a pre-market briefing on the most profitable opportunities in the global stock, currency, and commodity markets. Written by veteran trader Jeff Clark, and featuring expert guest commentaries, Growth Stock Wire is delivered to your inbox each weekday morning before the markets open.

Customer Service: 1-888-261-2693 – Copyright 2009 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Growth Stock Wire Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in