The GDX ETF and big cap mining stocks are forming a simple triangle pattern consolidation pattern. This is putting several key big cap mining leaders into buying positions. I own the GDX ETF as a core position in my IRA as part of a rebalancing diversification strategy.
First here is the ETF.
A close above $28.50 would mark a close above this downtrend resistance line on the GDX. However, I don’t think it would mark an instant rally straight up to $31 and to new highs, but a continuation of the consolidation pattern playing out in the precious metals and mining stock world.
This is a correction that began right around Labor Day. We have likely seen most of the price losses for it and are now in an overall sideways phase much like GDX went through in May and June before it blasted off. Consolidations shake out week hands and prepare the way for the next rally.
The chart of gold provides more clues.
Gold also appears to be setup to go sideways like it did from April to June. It seems likely to me that the big breakout will happen towards the end of this month or in November.
However, the best time to buy the leading gold stocks is during periods of consolidation like this. And some of the top mining stocks are going to simply breakout to new highs and run before the GDX and gold do so. That’s why they are leading stocks.
The rest of this article is for Power Investor members only, because it mentions several stocks known only in the private group. If you are a member of the private group to read the rest of it click here.
To become a Power Investor member go here.