Cash to flow into beleaguered gold miners?
The Market Vectors Junior Gold Miners ETF closed Tuesday up 69 cents, or 3.11% — about 41 cents and 2% above Monday’s low — as it attempted to put in an upside reversal session after making new multi-year lows (since July 2010).
This amidst a glaring positive RSI (momentum) divergence represents a potentially very significant “trend change session.”
Of course, we need to see upside continuation within the next two sessions, which, if satisfied, will indicate that the long corrective (bear phase) slide from the April 8, 2011 high at 40.28 is over and that a period of a potentially powerful recovery is underway.
Comparing the GDXJ with the SPDR S&P 500 , we see that since the October 2011 lows, the SPY has gained 32.4%, while the GDXJ has lost 12%. In other words, the junior gold mining names did not participate AT ALL in the powerful, relentless October to April advance in the S&P 500.
That said, perhaps just as curious was Tuesday’s inverse behavior of the two ETFs, which shows that on a day when the SPY declined 1.7% (its fifth consecutive session), the GDXJ reversed to put in a daily upside reversal spike amidst a positive momentum divergence.
What does it mean?
From a technical perspective, the GDXJ has put in a potential double-bottom low concurrent with a significant breakdown in the SPY, suggesting that money is beginning to flow into the ignored and beleaguered gold mining sector and will continue to do so, especially if fears of another crisis in the euro zone and its potential global contagion trigger investor flight into hard assets.
The top holders within the GDXJ are: Alamos Gold, Perseus Mining, Minefinders, Silvercorp Metals , Medusa Mining , B2Gold Corp., DCP Midstream Partners , Banro Corp. , Kingsgate Consolidated , and Kirkland Lake Gold . – MarketWatch
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