The bottoming process for gold and silver shares
has been arduous as they’ve oscillated back and forth for almost a
year. We noted a month ago that the failed breakout in March (http://www.gold-eagle.com/article/failed-breakout-marks-interim-top)
was strong evidence that an interim top was in place. Heading into this
week it looked like the miners would fall further before finding
support. However, over the past two days the sector clearly reversed its
short-term course. For now this appears to be a rebound from an
oversold bounce.
We plot GDX, GDXJ and SIL in the chart below. As of Monday’s low, the miners were very oversold in a small space of
time. From recent highs GDX was down 18%, GDXJ 27% and SIL 21%. Thus
the miners were ripe for a bounce. The bullish reversal on Monday
coupled with confirmation on Tuesday signals that a rebound is underway.
The initial upside targets are the open gaps from six days ago and the
50-day moving averages.
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