From Noah Browning: (Reuters)
Oil prices slipped more than 1% on Monday as signs of an economic slowdown amid international trade disputes began to outweigh supply fears stoked by attacks on oil tankers in the Gulf of Oman last week.NYSE:USO June 17, 2019 11:19am
Gold miners are returning to life after a long slumber and could reward gold bugs and other bulls with superior returns in coming months. Sector gains may be widespread, with participation at all capitalization levels and the potential for the strongest components to post six- and seven-year highs. Better yet, there's no rush to get on board because major mining funds are now trading at resistance and could offer more advantageous entries at lower prices.
The gold futures contract is trading above $1,350 for the first time since February 2019. More importantly, it has now completed a six-year basing pattern that will set off major buying signals when the uptick lifts above the 2018 high near $1,400, or $130 on SPDR Gold Trust (GLD). (See also: Gold Completes 6-Year Basing Pattern.) However, the breakout could take time to unfold, allowing sector aficionados to place limit orders at lower levels on major funds or their favorite miners.
The VanEck Vectors Gold Miners ETF (GDX) came public in the mid-$30s in May 2006 and entered a narrow trading range, ahead of a 2007 breakout that reached $56.87 in March 2008. It crashed with world markets during the economic collapse, bottoming out at an all-time low in the mid-teens, ahead of a 2009 recovery wave that reached the prior high at yeas end. The fund broke out in the fourth quarter of 2010 and eased into a volatile pattern that posted an all-time high in the upper $60s in September 2011.
A 2012 breakdown signaled the start of a multi-year decline that continued into January 2016's bottom at $12.40. The fund posted exceptionally strong upside into the summer of 2016, more than doubling in price into a three-year high in the lower $30s. Price action since that time has been sandwiched between the 2016 high and low, while the pattern since 2017 has carved a long trendline of slightly lower highs.
The latest bounce has reached this resistance level for the fifth time, raising odds for a breakout at the same time as the underlying commodity. The first upside target lies at the 2016 high, offering a potential 33% profit after a breakout, but the monthly stochastic oscillator has crossed into a sell cycle, predicting that it's too early to buy the fund or popular components. As a result, it makes sense to sit on our hands and wait for lower prices.
The VanEck Vectors Junior Gold Miners ETF (GDXJ) entered the public exchanges at $104 in November 2009 and topped out at $118.76 a month later. It cleared that resistance level in September 2010 and exploded to the upside, posting an all-time high at $179.44 in December. The fund carved a topping pattern into September 2011 and broke down, entering a severe downtrend that yielded a one-for-four reverse stock split in July 2013.
The fund bottomed out at $16.87 in January 2016 and turned sharply higher into August, topping out at a three-year high in the low $50s. Bearish price action since that time has carved a long and lazy series of marginally lower highs and lows that have held above the .618 rally retracement level, keeping the bullish 2016 buying impulse in play. However, unlike GDX, it's hard to draw a trendline of highs that define a narrow breakout level.
The monthly stochastic oscillator shows a more advanced sell cycle than the larger-cap fund and has now dropped into the lower half of the panel. This is a "no buy" zone because it predicts that prices will drop further when the indicator approaches the oversold line. Taken together with the missing trendline, it makes sense to avoid junior miners except for group leaders, at least until the fund mounts the 50-month exponential moving average (EMA) in the mid-$30s.
The Bottom Line
Gold miners have turned higher in sympathy with the gold futures contract and could hit multi-year highs in the coming months.
The VanEck Vectors Gold Miners ETF (GDX) fell $0.01 (-0.04%) in after-hours trading Friday. Year-to-date, GDX has gained 0.39%, versus a 8.83% rise in the benchmark S&P 500 index during the same period.
GDX currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #8 of 34 ETFs in the Precious Metals ETFs category.
This article is brought to you courtesy of Investopedia.NYSE:GDX June 14, 2019 5:31pm
From Martin Baccardax:
Global oil prices declined this week, even as tensions in the Gulf region threatened to disrupt supplies and President Donald Trump blamed Iran for a series of attacks on tankers in one of the world's busiest shipping lanes.NYSE:USO June 14, 2019 5:24pm
From Lucia Mutikani:
WASHINGTON (Reuters) - U.S. retail sales increased in May and sales for the prior month were revised higher, suggesting a pick-up in consumer spending that eased fears the economy was slowing down sharply in the second quarter.NYSE:XRT June 14, 2019 4:56pm
From Sweta Killa:
In order to capitalize on the ongoing boom in marijuana industry, Global X is looking to join this uncrowded space. This can easily be depicted from the recent filing of the Global X Marijuana ETF with the Securities and Exchange Commission.NYSE:MJ June 14, 2019 4:43pm
From Sean Williams:
There's pretty much no hotter topic at the moment than legal marijuana. Even with cannabis stocks running into some hurdles in May, the industry has, as a whole, greatly outperformed the broader market in 2019, and has been running circles around every other industry since the beginning of 2016.NYSE:MJ June 14, 2019 11:28am
U.S. stocks rose Thursday as investors mostly shrugged off a spate of geopolitical concerns. Meanwhile, oil prices reversed steep declines earlier this week amid reports of a suspected attack on tankers in the Gulf of Oman.