I will take a more in depth look in the video later, but here are some thoughts.
GDX has been the standout performer of the year. Friday’s close marked an exceptionally interesting place on the charts. From January’s low to Friday’s high, the ETF is up 95% from the low to the high! Remembering that the ETF is an average of sorts, many individual components surged a lot more than that. However, the price action on Friday was not that good. The ETF opened to a new high, traded higher and then spent all day drifting lower to close at the lower end of the range on high volume. That is a technically weak candle.
One day does not make a trend, but after a massive move, traders should be looking for where to take profits. With Gold at resistance and the miners trading down on a day that gold trades up, gives me cause for concern.
The MACD has been marking out some negative divergence with a lower high in May compared to February. The next week should be interesting to see if it starts rolling over again. An ETF running 100% in a few months might need some consolidation but this has been such a hot money trade, I am inclined to think it might be even more heated on the way down.
One other thing that can happen when a massive trade ends, is a volatility surge. That happens in a highly volatile trade near the end of the run. You may see a pullback, then a surge with a massive gap up (6% in this case) and then over the next few days, it runs out of steam. That condition seems to be there.
Yellen speaks on Wednesday and a lot could happen between now and then, but I’ve held my miner shorts for two reasons. The first reason is because JDST and DUST both gapped below my stops. And secondly, I know how fast sentiment changes.