Gold and Silver Mining Stock Poker for a Late Fall Rally

On Nov. 3, I published an analysis with some mining stocks to consider in “Gold and Silver Mining Stocks Poker for a Late Fall Rally,” which is a follow-up from a list I started back in June. While adjusting your personal watch list, be sure to review my technical analysis for the holiday season and New Year in “Silver and Gold in 2020,” published on Dec. 20.

“After scanning all the mining stocks… I selected a few miners to consider from a technical analysis point of view. Many look promising due to the rally in gold… but few adhere to selection preferences. The primary filter is high volume with a minimum of 1 million shares traded on an intraday basis and no dead minutes to ensure tradable liquidity for scalps or swings, and then chart patterns and studies that indicate the potential for a near-term rise in price. The last issue you want regardless of your investment time horizon is to be sitting on a large block of shares with no liquidity and a bid/ask flow and volume giving you the middle finger when trying to close out positions.” – TraderStef, Jun. 7

Here is the list of miners with performance based on their highs. There are major winners and a few with lackluster results as of the Dec. 27 close.

Links for the $GDX VanEck Vectors Gold Miners ETF and $GDXJ Junior Miners basket.
* Mining equities carried over from the Jun. 7 stocks to consider list with an Aug. 21 update, whose technical outlook remained within parameters. After calling the pullback in gold and silver in mid-August, they rallied back to near pre-pullback price levels as of Nov. 1.
** Three additions as of the Dec. 27 close. The three underperformers may be removed. Note that SBGL and NG are part of the GDXJ basket and the rest are in the GDX.

To view a larger version of any chart, right-click on it and choose your “view image” option. Instead of including excerpts in chronological order from a few prior analyses, only the Nov. 1 commentary is included today. You can review the previous charts and commentary by drilling back through the dated links within previous analyses.

GDX weekly chart as of Dec. 27, 2019 close…

Excerpt from the Nov. 1 monthly chart analysis:

“The monthly chart remains bullish, with the overhead 100 EMA challenged on a rising price with rising volume.”

Excerpt from the Nov. 1 daily and weekly chart analysis:

“When spot gold catapulted through $1,350 and the $1,380 Fibonacci level resistance of six years was obliterated in June, the gold and silver mining sector happily followed along. You can see on the GDX daily and weekly charts where the price action decisively breached all of the moving averages on Volume. That spike in price became the base for an Up Channel that peaked at $30.96 on Sep. 4, which is the same day that gold printed its most recent high of $1,557 and silver at $19.64. As gold took an expected breather to consolidate, the GDX broke down from its high into a Falling Wedge.

Just as gold and silver are basing out and in the process of exiting their Falling Wedge patterns, the GDX is pivoting out with rising buy Volume. Note that the Golden Cross on the weekly chart, a price pivot off the 21 Exponential Moving Average (EMA) without violating the 23.6% Fibonacci, and the price action on the daily cleared all of the moving averages. The DMI-ADX, StochRSI, CCI, Momentum, and Money Flow are all more positive on the daily vs. the weekly, but that dynamic is typical as the daily studies make their headway before the weekly follows.

Near-term resistance levels for GDX are $28.18, $29.58, $30.96, $32 at the 500 Simple Moving Average (SMA) on the weekly, then $33.25 at the 38.2% Fibonacci. I remain bullish long-term but recommend waiting for gold to successfully reassert its rally before risking momo play capital on the GDX.”

While gold and silver rallied just before Christmas, the GDX followed with a decisive breakout from its own Falling Wedge and the price closed solidly above all the moving averages except for the 500 SMA. The 500 SMA continues its trend downward and is currently sitting at $31.40. When it is breached with conviction along with the 2016 high of $31.79, the evasive 38.2% Fibonacci at $33.25 is next on the hit list.

If momentum continues upward in gold as we move into the New Year, the bullish Alligator Tongue pattern setting up on the DMI-ADX will push further price gains in the GDX. The StochRSI has already spiked to the upside and the CCI and Momentum indicators have turned upward, but the Money Flow remains muted. The buying volume is strong and steady, but it has not reached the same level seen during 2016 when gold’s primary bull (accumulation phase vs. secular bull) liftoff ignited a rally in the mining sector. Take note of the Cup ‘n Handle pattern developing since the 2016 high, which will confirm when $31.79 is taken out.

The price action is very positive with the GDX, but for a wicked run up to the 2011 high to take hold, a decisive breach on volume through $33.25 is essential. The Fibonacci lateral levels from $33.25 onward are noted on the first chart above. I am bullish long-term due to gold’s positive price action, but caution is warranted until a breakaway from $33.25 occurs, which is a key signal for institutional heavyweights to layer much larger long positions in the mining sector.

Here are charts from the two top performers in the list of miners to consider.

CDE (+47%) – Coeur Mining weekly as of Dec. 27 close…