GDX: We've Run Out of Chances
I scaled into a GDX long in early November. That position was closed this morning. Still long metals long term, but I think pull backs are likely. I provide some TA thoughts on why.
I had to take small profit in my GDX trade that I’ve had on for several weeks. If you recall, I’ve been looking for a sustained breakout above $29.50 in the VanEck Gold Miners ETF (GDX) since early November. While we have had some daily closes above that level, none of them have been terribly convincing and we’ve failed to get the meaningful move up that I’ve been looking for to validate a breakout.
This isn’t terribly surprising at this point. Earlier this month, I wondered if we were running out of chances to take out $30:
Under $29 is fine this week. I don’t think we want to see under $28 though. That could be a sign that the trade isn’t working. We’re running out of chances to take $30 before another leg up.
Well, we now find GDX back under $29.50 to open the session today and I’m also seeing some general weakness in the metals that I think will put pressure on the miners for the time being.
This is the weekly chart for GDX. In the line that I’ve drawn at $29.50, we can get a sense for how frequently the ETF tests this level. Over the last 8 years or so, it would be considered unusual for GDX to breakout or breakdown on the first attempt at the level. I do think GDX will breakout above $30 and have a strong bull run in 2023. I just think it would be more wise to wait in cash for the time being. The metal itself looks to be setting up for a pullback:
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