Katie Stockton, MKM’s lead Technical Strategist, wrote in a report yesterday that Gold is oversold from a short-term perspective and appears poised to resume its uptrend. We talk a lot about the precious metal itself here on Allstarcharts, but in this case they are talking about the miners. More specifically, Katie Stockton and MKM suggest placing bullish bets on the Junior Gold Miners.
“$GDXJ is also oversold and appears poised for a relief rally, with initial resistance near $32.50 a share,” Katie Stockton, the firm’s lead technical strategist, wrote in a report. Last week’s “oversized 8.7% drop” in GDXJ, she added, appears to have created at least a short-term buying opportunity. MKM’s recommending long directional exposure to the ETF.
I think that it makes some sense to be looking at the Junior Miners here. Take a look at the breakout from that ‘Head & Shoulders’ looking pattern last summer. That neckline area that was Resistance then, is acting as some support on this test. In addition, the risk/reward here isn’t too bad either. With last week’s sell-off and then yesterday’s bounce, it appears that $GDXJ is trying to put in a ‘higher low’. From a risk management perspective, if the Junior Miners take out October’s lows, then all bets should temporarily be off.
Tags: $GDXJ $GDX $GLD $GC_F