Listen to the audio version of this article (generated by AI).
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…
This Sector Has Upside Potential Again
BY MIKE BURNICK, CONTRIBUTING EDITOR, MARKET MINUTE
Jeff and I have both been watching and patiently waiting for another opportunity to buy into metals. And now that patience is about to pay off as cyclical trends are turning bullish again.
Uranium bottomed in mid-October and uranium stocks soon followed. In fact, Jeff just scored partial gains of 100% in the Global X Uranium ETF (URA). And he also doubled-up on gains with the VanEck Gold Miners ETF (GDX).
Now, our Trade Cycle indicators tell me it’s about time to reload for more gains in gold… especially the miners.
As you can see above, our long-term Cycles chart for GDX is at a valley low point right now. Next, we should soon see a renewed uptrend in gold mining stocks (plus silver too), which should carry them higher in December and into the New Year, with a cycle peak forecast in February.
The easiest way to play this cyclical uptrend is with GDX itself, or better yet, well-timed call options on GDX.
But TradeSmith subscribers can also dig deeper to investigate the Health trends of the stocks that make up GDX.
Simply click on the Holdings tab in the chart above, and you’ll see the full list of ETF holdings for GDX.
Many of these stocks are in our Health indicator red zone short-term. But most are still in the Green zone, according to our long-term Health analysis. Several stocks are in the short-term Health yellow zone too, which means they’re still healthy, but have pulled back in price.
Stocks that are long-term Green, but short-term Yellow can give you profitable buy-the-dip trade opportunities. That happens when short term Health goes Green again, for a new “flash buy” signal.
Newmont (NEM), Agnico Eagle (AEM), Franco Nevada (FNV) and Royal Gold (RGLD) all fit the bill right now. These stocks could be very close to delivering new flash buy signals, so keep watch.
A word of caution: Any stocks in the Health red zone should be avoided, as our extensive research shows these stocks tend to keep underperforming the market when in the red.
Good investing,
Mike Burnick
Contributing Editor, Market Minute