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Managing Editor’s Note: Today, we’re hearing from our contributing editor Mike Burnick in his weekly feature.
Mike has over 30 years in the investment and financial services industry – from operating as a stockbroker, trader, and research analyst, to running a mutual fund as a registered investment advisor and portfolio manager, to being Research Director for the Sovereign Society, specializing in global ETF and options investing.
And he’s been senior analyst at TradeSmith for three years, running Constant Cash Flow, Infinite Income Loop, and Inside TradeSmith.
Here’s Mike…
Gold Is Looking at an Upside Breakout
BY MIKE BURNICK, CONTRIBUTING EDITOR, MARKET MINUTE
Last week I told you to watch a few key technical indicators for the Nasdaq 100 (NDX), because they were strongly hinting at an upside reversal.
Sure enough, NDX broke higher last Thursday, and jumped 9% in just four days. Now these same indicators are flashing a bullish signal for gold mining stocks.
Let’s take a closer look at a TradeSmith chart of the Gold Miners ETF (GDX).
Similar to the Nasdaq 100, GDX telegraphed its upside move beforehand. Notice the Commodity Channel Index (CCI) bottomed way back in June.
CCI has been in an uptrend ever since, even as GDX kept declining, which is a classic bullish divergence. This tells you to be on the lookout for a possible bullish trend reversal.
In the last few days, the MACD indicator likewise turned positive, signaling renewed upside momentum for GDX.
Finally, GDX broke above our TradeSmith Reactive moving average, which adjusts quickly to the latest price movements. We designed this unique moving average to give you an early signal confirming a new short-term uptrend.
TradeSmith subscribers can click the green Chart Settings button at left on our platforms Chart page to add many other technical indicators like these.
Bottom line: Considering the extended decline in GDX since March, this breakout move could easily carry the ETF up to $90-$95 for a potential gain of 15% to 20% or more!
Good investing,
Mike Burnick
Contributing Editor, Market Minute