Gold & Silver Mining Stocks Poker for a Late Fall Rally - Technical Analysis

Just over four months ago, I published “Minding the Gold Mining Stocks and GDX” on Jun. 7, followed by “Gold Mining Stock Poker and the Gold Bugs Index Breakout” on Jun. 23 and Part 2 on Aug. 21. A list of mining stocks to consider and their price performance are located within those articles.

“After scanning all the mining stocks on June 2, I selected a few miners to consider from a technical analysis point of view. Many looked promising due to the rally in gold… but few adhered 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 new list of miners to consider going into the late fall season. Take note of earning release dates because those reports can abruptly influence the price action.

Gold Mining Stocks to Consider November 3, 2019 - Technical Analysis by TraderStef

* Mining equities that were on the Jun. 7 stocks to consider list and their technical outlook remain within my parameters. After the pullback in gold and silver that I called in mid-August, these miners rallied back to pre-pullback price levels.

$GDX VanEck Vectors Gold Miners ETF basket as of Nov. 1, 2019. The mining stocks noted above are highlighted:

GDX Basket as of November 1, 2019

To view a larger version of any chart, right-click on it and choose your “view image” option.

GDX monthly chart as of Nov. 1, 2019 close…

Excerpt from the Feb. 8 monthly analysis:

“After GDX reached a high of $66.98 in Sep. 2011, the price plunged 88%+ over a 4 1/4-year period to end with a $12.40 low in Jan. 2016. The price pivoted to a high of $31.79 by Aug. 2016, then formed a Falling Wedge until its topside trendline was breached in Jan. 2019. The buy volume will need to come back to life for the price to breach the 50 SMA and rally to the 23.6% Fibonacci at $25.30.”

Excerpt from the Jun. 23 monthly analysis:

“The 50 Simple Moving Average (SMA) and Exponential Moving Average (EMA) have been breached after 5 months of sideways chop and the Falling Wedge is history, but the 100 SMA overhead has not been challenged yet and the rally hesitated at the 23.6% Fibonacci retrace level. The chart is bullish overall and the monthly buy volume is on track to best the previous month. The potential exists for a rapid $8 run in the near-term to the 38.2% Fibonacci level.”

Excerpt from the Aug. 21 monthly analysis:

“The overhead 100 SMA is in the crosshairs this month and the candlestick has enough breadth for the price to close above the 100 SMA. The DMI-ADX moved upwards to confirm a bullish Alligator Tongue, the Momentum indicator is rising steadily, the StochRSI and CCI are hovering in overbought territory and may remain there for an extended period, Volume grew over the last three months along with the price, and August is likely to match or exceed July’s Volume print.”

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

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GDX weekly and daily charts as of Nov. 1, 2019 close…

I will focus on the daily analysis progression and reference the weekly in today’s commentary.

Excerpt from the Feb. 8 daily analysis:

“A 50/200 EMA Golden Cross occurred at the peak of the Flagpole & Flag.

Excerpt from the Jun. 7 daily analysis:

“After mirroring gold’s Falling Wedge that began in late Feb. 2019… the GDX (briefly) fell back below all the moving averages in the Descending Broadening Wedge… If gold manages to break above its $1,350 resistance with conviction in the near-term, I suspect the miners will follow with gains in price. The next price target and resistance on the GDX would be the overhead Fibonacci level at $25.30, and then the 38.2% Fibonacci at $33.25.”

Excerpt from the Jun. 23 daily analysis:

“The DMI-ADX Alligator Tongue on the daily chart was a picture-perfect setup… The buy volume spike on Thursday followed Wednesday’s FOMC meeting… If gold continues on an upward path without much hesitation in the near-term, the miners will likely follow along for the ride. As I type tonight, the gold price is challenging last week’s high of $1,412.”

Excerpt from the Aug. 21 daily analysis:

“It is important to note that when the price fell below all the moving averages in May, the 50/200 Golden Cross was violated for only a couple of days and reaffirmed at the first gap-up in price… The GDX has mixed signals on the studies, as gold is deep into another consolidation pattern. I remain bullish long-term as long as gold runs the show with its bull market, but I must take a neutral stance for now until gold completes its consolidation pattern. If gold breaks down any further or goes decisively below $1,483, the miners will likely follow and the price will break through the lower trendline of the Up Channel.”

When spot gold catapulted through $1,350 and the $1,380 Fibonacci 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, it chopped out to form a Half Staff Flag and silver mirrored it with a Falling Wedge pattern, while 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 patterns, the GDX is pivoting out of its Falling Wedge with rising buy Volume. Note that the Golden Cross on the weekly chart, a price pivot off the 21 EMA without violating the 23.6% Fibonacci, and the price action on the daily has 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.

If the gold price continues upward on the heels of last week’s rally and retakes the overhead $1,526 Fibonacci, the miners’ will likely follow. Near-term resistance levels for GDX are $28.18, $29.58, $30.96, $32 at the 500 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.

My latest technical analysis on gold can be found at “Monkey Hammered Muppets and Gold,” published on Oct. 14, and for silver at “Breakout Calls from the Bleacher Seats is Premature,” published on Oct. 26.

Gold has taken a licking but keeps on ticking… Death Proof – High-Speed Chase Clip:


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