Last week gold went up 2% but the gold miners’ index, ETF GDX, rose 11%.
But be careful. We are highly overbought on gold and gold miners’ stocks GDX and should expect a pull back soon within the overall uptrend. In fact, a recent report from Morgan Stanley Australia, states that miners are now extremely overvalued. Example: Newcrest Mining (NCM.Australia) trading at $21.76 Australian Dollars, compared to fair value of $A12.90. That’s 68% overvalued.
Gold 133 Minute Chart (GLDV Golds ETF)
The 133-minute chart (a third of a day that the ETF trades) shows a classic volume upthrust, followed by 2 bars of no demand volume indicating a probable pullback.
GDX 133 Minute Chart
The ETF of the gold miners is clearer. Again a volume upthrust, but look at the Trend dots. They are going flat, indicating this move is now in congestion entry, so expect a pullback in the overall uptrend.
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Definition of an Upthrust
An Upthrust Bar is a wide range bar, with a high volume and closing down. It indicates that the prices were marked up during the day, trading activity was high as indicated by the high volume, and the prices dropped to near the low (or to the low) towards the closing hours.
We demonstrate this and many other methods in our live demonstration room held every Wednesday, and this is open to everyone. Click this link for more information or to join us in class.
[The magenta arrows are for illustration only and do not form part of the software]