Another day, another decline in the miners. But given what’s happening in gold and stock futures, there’s more to come.
Yesterday’s session brought us a small, profitable daily decline in the mining stocks.
After verifying their breakdown, miners are moving lower once again – this is a completely normal situation. The GDXJ is simply not done declining.
In yesterday’s analysis, I wrote that declining gold or declining stocks would likely trigger bigger declines in the junior miners. And in today’s pre-market trading both moved lower.
Gold price declined quite visibly after its second failed attempt to move above the 61.8% Fibonacci retracement level.
Right now, we see another quick move up, but since it’s happening after gold verified its breakdown below the rising support line (which now serves as resistance), the odds are that the decline will continue any hour now. It is possible that it might resume tomorrow or in the following days, but the key thing is that the top is quite likely in.
Silver is declining as well, and it even temporarily moved below Friday’s intraday lows.
Most interestingly, though, this might be the final top for stocks.
The 30-minute candlestick chart featuring the S&P 500 futures shows that they moved back to their Feb. 26 intraday lows – twice – and are now moving lower once again. In other words, the breakdown below those lows was verified.
This could be the case that the top is being formed, especially given how ridiculously big rally in stocks has been in the previous weeks.
I previously wrote that the decline in stocks and gold would quite likely coincide with a rally in the USD Index and indeed, the latter is on the move.
The USDX jumped much higher today, breaking above its very short-term, declining resistance line. After a sharp overnight rally, the U.S. currency is correcting a bit, which is normal. The breakout itself could mark the end of the current consolidation and the start of another upswing – this would serve as a perfect confirmation of the declines in stocks and gold. The profits on our short positions in junior mining stocks are likely to increase shortly.
The buying opportunity (as well as profit-taking opportunity for short positions) is near, and my premium Gold Trading Alerts include details necessary for those trades. My subscribers will also be informed through intraday Alerts to help them navigate those (and other trades).
We're on a record of twelve profitable trades in junior miners (long and short) in a row and this trade is likely to be closed profitably as well. I encourage you to join us and profit with us today.
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Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief