Below are some thoughts on buying the dip in gold stocks, which have been battered recently and are deeply oversold.
February 23 (King World News) – Jay Kaeppel at SentimenTrader: Some thoughts on buying the dip in gold stocks.
- Gold stocks rallied over +50% following the September 2022 low
- Since topping in late January 2023, they have fallen over -18% and triggered a useful oversold indicator in the process
- While some view this as a buying opportunity, several key indicators suggest caution
First, the good news
The chart below highlights those days when the 50-day average for our GDX Optix indicator crossed above 37. While overall results vary quite a bit from signal to signal, the 6-month time frame has shown some spectacular results. Since the most recent signal on 2022-09-02, GDX is up +15% even after the recent decline.
Unfortunately, the favorable 6-month period following the abovementioned signal ends on 2023-03-02.
Another little-known favorable sign for gold stocks occurred on 2022-09-23 when our British Pound Risk Reversal indicator crossed below -3.2. The chart and table below highlight the performance of GDX following previous rare signals.
Once again, the “sweet spot” is the 6-month time frame following a signal. This period has roughly a month left to run. So far, GDX is approximately +21% above its level on 2022-09-23…
Legendary investors are buying share of a company very few people know about. To find out which company CLICK HERE OR ON THE IMAGE BELOW.
Gold Bugs Index down ten days in row
The Gold Bugs Index (ticker HUI) is a gold stock index with a history back to 1957. Dean Christians alerted me to the fact that as of the close on 2023-02-22, HUI registered its tenth consecutive lower close. Dean also provided the chart below. Ten consecutive down closes are infrequent and historically have marked some terrific buying opportunities.
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