New Monthly Charts
July 2, 2019
Let’s step back and take a look at the longer term picture to see how miners look. Above is the monthly GDX chart, and it’s almost ideal, in my opinion. Not only have the moving averages turned higher, we see the stochastics are now back on the upswing. We will hold our miners until these stochastics are overbought, at the absolute minimum, so this trade has many months to go, if not longer. Let the trade take us out when it is ready, no sooner, no later.
Likewise, the SILJ is now sporting similar characteristics, and while not quite as strong as the GDX at the moment, SILJ could have much greater potential upside over time. SILJ’s moving averages just crossed to the upside this month, and we see that a parabolic time price signal (also called a PSAR signal on many platforms) is about to trigger after many, many months of a downtrend. Once that diamond prints below the stock price, this indicates we will see many months, maybe even years of upside for SILJ, but let’s not get ahead of ourselves. Review the GDX chart above, it’s now printed 8 diamonds already in this uptrend, and there is still no end in sight. These charts tell us to stay long for now, so that is what we will do.
While not a critical part of my analysis, it doesn’t hurt to know what other vehicles that affect metals are doing, and how their charts are looking. The US dollar etf is the UUP, and here we see it’s 2 month and 5 month moving averages also have just crossed, but this time to the downside after a long uptrend. More likely than not, the UUP will see lower prices over time, is what this chart suggests.
So all in all, everything is shaping up as expected and we will continue to ride the trade for what it is worth. If the above holds true, and combined with such things like a weak stock market, political turmoil, or economic weakness, this trade/investment should pay out well. We already have the movement our direction, and there are plenty of catalysts to really kick this into high gear. The hardest part is always just sitting on your hands, and not meddling with things at every little turn. Chart analysis is second to maintaining clear thought and discipline.