Gold Stocks Rally…Is This The Bottom?

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Commodity Trading Research
Gold Stocks RallyIs This The Bottom?
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• Hi, My name is Justin and Im with Commodity
  Trading Research, today were reviewing our
  recently published article

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• Gold Stocks RallyIs This The Bottom?

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• Something very interesting is happening with gold
  stocks Over the past few days share prices of
  companies in the beleaguered industry have
  experienced sharp rallies.

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• Take Agnico Eagle Mines AEM for example- the
  Canadiangold miner is up 16 over the past four
  trading sessions.
• See for yourself

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• As you can see, AEM is rallying to multi-month
  highs over 28. While the chart is impressive,
  the best way to shed light on the recentgold
  stocks rally is through the Market Vectors Gold
  Miners ETF GDX

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• As youre likely aware, GDX holds a diverse
  basket of the worlds largest gold mining
  companies. Names like Barrick Gold ABX,
  Goldcorp GG, and Newmont Mining NEM are all
  held in this closely watched ETF.

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• Without question, its refreshing to see GDX up
  15 the past few days. After months of bearish
  price action, an upturn brings much-needed relief
  to beaten down bulls.

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• But whats really catching my eye is the
  technical pattern in the chart above...

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• Notice how GDX is breaking above an important
  resistance trend line (declining red line) from
  the May 2015 highs.Whats more, the gold mining
  ETF failed to drop below technical support at 13
  (horizontal red line).

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• With GDX rallying sharply higher from this
  consolidation pattern, there are good odds of
  additional gains to come. In fact, I wouldnt be
  surprised to the see the mining ETF trading at
  17 in coming weeks.

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• Whats so important about the 17 area?
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• Lets look to a long-term chart

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• As you can see in this 2-year weekly chart, GDX
  still has a strong resistance line to overcome at
  the 17 area. This downtrend from the 2014 highs
  will provide a considerable hurdle for the gold
  mining ETF to conquer.

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• Is there a fundamental reason for gold stocks to
  rally to that level?

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• Last Fridays US non-farm payroll report was a
  huge disappointment. In case you havent heard,
  there were only 142,000 jobs added in September-
  a far cry from the 203,000 job additions expected
  by economists.

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• This dismal jobs performance lends to the idea
  that the US Federal Reserve will delay raising
  interest rates until early 2016- and possibly
  longer.

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• Of course, thats good news for the price of
  gold. Speaking of gold
• The yellow metal is on the verge of breaking
  above an important resistance trend line of its
  own.

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• Should gold surpass 1,500 an ounce, which
  roughly corresponds with the red line in the
  chart above, well likely see an additional rush
  of short covering in the commodity.

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• Its not out of the realm of possibility to see
  the yellow metal rally to 1,200 should the red
  line be breached. Such a bullish situation would
  add even more fuel to the fire for gold mining
  stocks

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• Bottom line

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• While Im not yet willing to suggest a long-term
  bottom has been hit in gold mining stocks, I do
  believe theres a good chance of solid upside in
  the near-term.

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• The combination of the technical factors above,
  along with Septembers lousy jobs report, should
  have gold stock bears getting more nervous by the
  day.

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