Tuesday, February 28, 2017
GDX COLLAPSE: BLAME JORDAN ROY-BYRNE
Get Back Jojo - interim top in the gold miners. He posted it right before yesterday's carnage.
He thinks $22 is decent support for GDX, otherwise $20.
As far as my own opinion, I have a TA one and a fundies one.
TA: I was looking at that SMA(50) at $22.50 or so and thinking that would be a decent target for a retest of the January breakout which so far has never been tested... I just thought it would be a gentle month-long drop hugging the bottom of the EMA, not a one-day puke. A successful pivot at the SMA(50) is positive for miners, but a drop straight through the SMA(50) bodes badly.
The problem with that is that even a successful retest may print an intraday as low as $20, especially when selling has been so heavy so far.
Also, gold yesterday turned back at the SMA(200), which is also the support point that failed back in November; so is someone thinking gold is going to drop here, and they want to dump miners ahead of the gold drop?
Fundies: obviously someone big bought the GDX and GDXJ a while ago, because the ETF-heavy miners took off higher than the less-ETFed miners. And now they (or someone trying to shake them out) are puking these same ETFs into an empty book, in a way that makes everyone else pull their bids. Which looks more like intentional sabotage than fundamental-led selling.
Especially with gold failing to collapse.
So did this just happen because President Piddles is speaking today? Is he supposed to somehow tank the price of gold? Y'know, with his lack of economic growth and his Republican deficit spending and his sabotaging the dollar and his sowing of geopolitical uncertainty?
So as usual, I really have no clue what's happening next, but I don't see any fundie reason why the December tax-loss low in gold and the miners should be retested, absent a change in broad outlook that's larger than the paradigm shift we were already hit with when we found out Trump won the election. And I doubt we'll see anything bigger than that coming out of Trump today.
And I'll be interested in watching how non-ETF miners do relative to ETF-heavy miners. I'm lucky to own one junior goldco that saw buying yesterday, on huge volume too, even with all the other miners getting sold: that really screams an ETF-only move, here.
And I'll be interested in seeing if GLD (and especially SLV) continue to act as if nothing's happening. Problem with slamming GLD and SLV is that real people buy and consume those metals.
And I really think after Trump's big bang today, the next thing for the US indices to do is stop and let the SMA(50) catch up, at a minimum. We're 5% above SMA(50) right now, and that was the cue for the market to calm down in December.