From Taki Tsaklanos: Gold mining stocks had a great performance in January after they lost 43 percent since they topped last summer. InvestingHaven’s research team noted that gold is one of the 5 leading markets at an inflection point right now.
Uncoincidentally, gold mining stocks are also at an inflection point. They are about to test their bear market resistance price point. This is a very important moment in time for gold investors.
As reported before gold tends to move in channels, both up (bull markets) and down (bear markets). Analyzing the price of gold should always happen in the context of falling or rising channels. Right now, gold is near a very important test: $1260. Likewise, gold mining stocks are about to test an even more important price level than gold: 26 points in the GDX ETF.
Gold and mining stocks tend to overshoot their channel, as seen in the fall of 2015 and the summer of 2016. That was really under extreme bullish or bearish sentiment. At this point in time, sentiment is not really extreme in the gold market. InvestingHaven’s research team expects either a breakout or gold mining stocks to be stopped cold, between 26 and 28 points.
A break above 28 points for the GDX would be incredibly bullish, and would mark a turnaround from a bear to a bull market in gold mining stocks. However, if the 26 to 28 level will appear to be too hard to overcome, the falling trend lines will be tested in the coming months.
Gold investors pay higher than average attention on the coming 1 to 3 weeks.
The VanEck Vectors Gold Miners ETF (NYSE:GDX) fell $0.23 (-0.91%) in premarket trading Tuesday. Year-to-date, GDX has gained 21.41%, versus a 2.42% rise in the benchmark S&P 500 index during the same period.
Meanwhile, the VanEck Junior Gold Miners ETF (NYSE:GDXJ) fell $0.48 (-1.14%) in premarket trading Tuesday. Year-to-date, GDXJ has gained 34.04%.
This article is brought to you courtesy of Investing Haven.