GDX Signal change

[Pascal]

GDX has mainly been following the gold price in the past weeks and has gone nowhere since the Buy Oversold signal.

With gold being pushed down today on a USD resistance break, it is normal that gold miners investors give-up.
I was myself ready to by the silver sector on Monday/Tuesday, but there was too much negativity around.

The question is now: what about the GDX short signal that was just issued?

We can see below that the EV pattern on the US$ and the Euro show that we might try a trend reversal tomorrow.
We can also see that the Yen is not negative for the day and that oil bounced back up.

This means that we might have a reversal in gold tomorrow IF the US$ pulls-back somehow.
I would prefer to short a bounce than short weakness in GDX.

One thing is certain: gold is not a leading market. It is a tiny market that follows the moves in the big currencies market.


Pascal

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[Pascal]

As I wrote it yesterday, gold reversed up because the USD reversed down.
The USD reversed down because the Yen bounced up.
The Yen bounced up because of the Japanese surprise GDP data.
I guess that this data was already known yesterday and hence the strange pattern that we could detect in these different currencies.

In all probabilities, the short GDX model signal will be reverting to a long signal.

The real question is the following: is the surprise GDP data in Japan due to much higher oil prices that show in the GDP as higher oil consumption? If this is true, then it is the first evidence that monetization in a key economy is leading to inflation. This might be what gold is telling us now.



Pascal

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[Pascal]

The GDX Model issued a confirmed buy signal just at the close.
Since nobody could have the time to act on the confirmed signal, we have to consider that we are staying in a non-confirmed buy signal. The model will therefore start the day as a non-confirmed buy signal and will either confirm the signal or not confirm it depending on the MF during the trading day.

As the gold futures are somewhat weaker now, I suspect that GDX will open with a small down gap that will attract money and that the buy signal has a high probability to be confirmed in the morning.


Pascal