Gold just moved to almost $2,000, miners are underperforming gold once again, and it’s the triangle-vertex-based reversal day for the GDXJ.
Silver is up (at the moment of writing these words) by 2% while gold is up by only 0.81%. Silver’s outperformance is not huge, but it’s here.
Since gold reached its upside target area, we got the bearish relative-performance-based confirmations, and it’s the reversal day for the miners, in my opinion, re-opening short positions in the GDXJ is now justified from the risk to reward point of view.
At the moment of writing these words, the GDXJ is trading at about $35.25. We took profits from the previous short position slightly above $33, which means that we’re getting back on the short side of the market at higher prices, thus increasing our overall profitability from this big, medium-term decline in the mining stocks.
I will provide more detailed profit-take targets for this position in Monday’s regular Gold Trading Alert, but it’s likely that the first (!) downside target will be close to $28 in case of the GDXJ.
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Today’s regular Gold Trading Alert will be posted a bit later, and due to the publication process it will feature yesterday’s charts. The publication process takes some time, and sometimes (rarely, but still) the situation on the market changes in the meantime. Right now, it changed – the original analysis mentioned being prepared for opening the short position, and given what is happening right now, I think that it should be already opened.
I will adjust the analysis that is right now in the publication process, but in case I miss something and a sentence or two seem confusing, please keep the above (and below) in mind.
So, to clarify in advance – my opinion regarding the current trading position is as above – I think that short position in junior mining stocks is justified from the risk to reward point of view.
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As always, we’ll keep you - our subscribers - informed.
Thank you.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief