Wednesday, March 5, 2014

I'm not entirely convinced the miners are dead - a story with pictures

I sold my miners in anticipation of a PDAC curse. Of course, the next day Emperor Pooty-Poot invaded the Crimea, so things have since been given an opportunity to unfold in a non-standard manner.

Still, since I'm all about keeping an open mind and not adhering hard to any belief unless it makes me money, let's look at the charts and see if they confirm my move:

(charts after the jump, because there's many of them)

First, what you'd think is the important one: gold.

Gold is still above its EMA. MACD is rolling over, but that doesn't mean more than consolidation if this is an uptrend. Volume tells me nothing right now.

And of course the most recent days on this chart could be distorted by geopolitics.

Problem is, I don't see any reason why Wall Street Whitey would be buying gold right now, given S&P's move back upward and the historical outperformance of SPY in March and April. I think he's already bought all the gold derivative positions that he's going to buy.

I use silver as a confirmation for junior miners, as well as a proxy for stupid White-ass traders who don't understand the difference between gold and silver. It's come down from its recent surge, but is still supported at its EMA. Still, there's a juicy gap waiting to be filled, and apparently some people believe in gap fills.

GDX is still going horizontal. Volume is dwindling from the early-Feb surge, but yet the price still doesn't go down.

And of course, it could be that the senior miners were viciously oversold for the last several months of the year, and so have good reason to continue drifting up for the next few months, no?

The GDX-to-GLD ratio is still not really telling me anything. It's still an uptrend that hasn't been violated according to the EMA.

GDXJ still hasn't rolled over. Again, volume has collapsed from the early-Feb surge, but that only tells me that nobody knows if they really want to buy or sell any more right now. Though I doubt we can exceed mid-Feb's volume; frankly, that looks like an exhaustion surge to me.

As an aside, did you note Cookie's comments yesterday? He said he's broken open GDXJ and looked at its components, and found that the strongest-advancing stocks have been the ones he'd least likely ever want to invest in. So garbage has come back strongly. So therefore, GDXJ isn't really telling us anything.

Always smart to look under the hood though.

Yo-Mama is the senior miner least likely to suck, and its chart also still isn't telling us anything. It's consolidating and awaiting its next move. But it's broken on a close below $9.80 or so.

Franco's a guaranteed money-maker run by top men, and yet it is rolling over. So is that a tell as to where the broader miner space goes in the next week or two? Or is that just a commentary on the market's beliefs on the price of gold?

And yet B2Gold, also a great miner, hasn't stopped going up. You can't see the US volume on this chart very clearly, but the Canadian chart shows volume isn't shying away: we had 2 strong volume up-days just last week. So is this a tell that miners are still going up?

And Rio Alto had broken down, but has now popped back above its EMA. Yet with lower lows on the RSI and MACD disconfirming the higher low on the price chart.

So in summary, the indexes aren't telling me which way they're going next, the big streamer is looking negative, but two really good larger juniors are looking positive.

So here's a "third way" to interpret all this: is this going to be a reallocation-style consolidation, where the GDXJ holds steady while the good miners advance and the garbage gets sold back down?

After all, I don't play this space by buying GDX and GDXJ; I play it by buying RIO and BTO.

Frankly, this was a long exercise in saying I can't really tell where anything's going next.

But if I don't know, I'm not going to buy.

I'll keep watching.

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