Yesterday, the GDX mining stock ETF went up 3.97%. What is important, though, is that the GDX is outperforming the S&P 500 and has been doing so since the last significant peak that average made around the Jackson Hole meeting back in August. Check out the GDX/SPX relative strength ratio on the bottom of this chart.
GDX formed a base in the $22-$25 zone and broke out of that zone early this month. Now it’s in a new narrow triangle continuation pattern, as you can see on the above chart, but again it’s the indicator on the bottom that is the most important thing.
You see, if you want to beat the market the way to do it is to invest and buy the things that are beating the market, whether that is stocks, ETF’s, or entire asset classes.
Crypto has been lagging the performance of the market all year and that was a warning that anything could happen with it. And so crypto exchanges are blowing up and Bitcoin hit a new 52-week low. Everyone that is in crypto is wearing a millstone on their necks.
But crypto isn’t the only thing lagging. So is the Cathie Wood ARKK ETF.
Something that has a declining relative strength ratio plot, like the above chart, is something to avoid or sell.
I have a position in GDX in my IRA. One big cap mining stock I own is WPM.
WPM closed right above its 200-day moving average on Tuesday.
In case you missed it I had a good discussion with David Skarica of addictedtoprofits.net on what is going on in the markets.
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-Mike
