Friday, January 3, 2014

On IKN and the end of the junior miner rally

IKN - junior relief rally looking short-lived, whinge whinge. Quote:
When you have 1) gold slightly up but 2) the junior rally being led by the cruddy end of the sector and 3) in general, the quality end of the junior mining sector not following through, it points at best to traders happy to lock in swift profits and then see what happens next or at worst, to the premature end of any rally. 
Let's look at some charts:

GDX is beyond 2SD up, and threatening to rise above the SMA(50). I'd think we should expect some resistance here, maybe even a drop to $21.20, even in an uptrend.

GDXJ is more than 2SD up, and very close to its SMA(50). Again, this is where we should expect it to fall back, maybe even down to $31 for a gap fill, even in an uptrend. Quit whining, your favourite Peruvian junior is already way above its SMA(50).

For the past 2 months, gold has never gotten this far above its short-term mean without dumping back down. And today you have three different Fed speakers who are going to be saying things that result in immediate knee-jerk movements in the gold price by the trading bots. If that's a bad thing, why hold gold miners instead of the S&P 500 or Eurozone stocks?

So sure, people might sell and book profits. For one day. That's what the market does when all its participants, including the anal ysts, are thinking in terms of intraday moves only. It's abused child syndrome, that's all. Question is, what happens by Monday afternoon?

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