Contributor Since 2009
May 10, 2012
Only Monday we wrote that shares of Market Vectors Gold Miners (NYSE: GDX)) were in a sustained downtrend and would likely move lower still.
On Tuesday, GDX gapped down at the open and closed with another substantial loss, in this case just a fraction above $40.
Apparently this was support for GDX as round numbers often are and on Wednesday, May 9, the stock has posted a bullish outside reversal day.
A bullish outside reversal day is one in which the stock trades at lower lows than the day before, and closes at higher highs than the day before. When it occurs after a sustained downtrend as GDX has been in, it is a bullish indicator.
The bullish indicator may be short term in nature, forecasting only several days of advancing prices. It could also mean a tradable bottom is in place. There is no way to know at this point so any trades should be placed with tight stops.
IF GDX was to close above $45 a share in coming weeks, we would be looking at a potential new upward trend.
The Fibtimer.com (www.fibtimer.com) ETF Timing Strategy does not currently have a position in Market Vectors Gold Miners.
Frank Kollar has been timing the financial markets since 1982, with online service since 1996. He is a dedicated trend timer and his strategies exited the markets before the crash in 1987 as well as the bear market in 2000 through 2002. During the 2000-2002 bear market and the 2008-2009 bear market his bearish positions resulted in substantial gains, all achieved by trading trends.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.