First a chart I posted in the Trading Lab shortly after the market open this morning:
At the lows this morning the GDX was heading for its 6th consecutive down day, meanwhile, you can see classic signs of the gold mining sector becoming "sold-out" (waning volume at fresh 52-week lows, RSI/MFI divergences). The concept of an oversold market reaching a sold-out condition takes me back to the summer of 2011 when the S&P 500 made a marginal new low in early October 2011:
This low was accompanied by lower volume than the August 2011 low, as well as similar bullish MFI and RSI divergences that we are seeing right now in the GDX.
In addition, my analysis of gold miner sentiment shows that we are actually at levels of depressed sentiment that are arguably worse than 2015:
If you're buying gold miners here you can definitely say that you're buying when there's blood in the streets. The optimism of the first few months of 2018 have given way to extreme pessimism and investors are as negative on gold mining shares as i've ever witnessed (and that includes 2008).
Finally, my secret weapon indicates that this is a very important long term spot for GDX:
@Ty's 'energy point' chart
Energy points tend to indicate a strong potential for a reversal, and they essentially consist of a confluence of trend lines.
The setup in GDX here is a nice one, i'd go as far as to call it a fat-pitch. As always have a plan and manage your risk.
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