20DMF and GDX

[Pascal]

It seems that IWM is bouncing harder than SP500. Probably a feeling that small caps are safer than larger caps.

As for GDX, the PM sector is still under pressure and even if the MF is very negative, it is still far away from the oversold level. Patience is required here. There will be opportunities "down the road".


Pascal

PS: I updated the Canadian section, the Gold, ETF and Futures sections.

[TraderD]

As for GDX, the PM sector is still under pressure and even if the MF is very negative, it is still far away from the oversold level. Patience is required here. There will be opportunities "down the road".

Pascal

Hi Pascal,

Is there anything particularly special about -1% level in GDX MF? If I'm not mistaken, there have been a few prior bounces off that level in recent weeks.

Trader D

[Pascal]

Hi Pascal,

Is there anything particularly special about -1% level in GDX MF? If I'm not mistaken, there have been a few prior bounces off that level in recent weeks.

Trader D

Your question is about the oversold character of the sector. Is -1% OS or is -1.45% OS?
In today's market, I would say like you that -1% is already oversold, but if I do a statistical study using past data - that are different from current data, then -1% could become more oversold.

I copy below the LT/ST edges figure. You can see that the ST edge has increased (as of yesterday's close). This is based on the 5D price trend and TEV pattern of GDX (the more negative TEV is the better). I also post the TEV pattern of GDX, which is today more negative than even at the close of yesterday. This means that the probability of a bounce tomorrow is high. However, the Bounce could easily fail. So caution is warranted here.



Pascal

PS: I did some calculation over the week-end and found out that since 2010, we had a 0.7 correlation between that sort of oversold TEV pattern and a 3% 10 days return on GDX. That is big, but since the stat sample is small, I decided not to publish.