Loading ...While it is never easy to accurately forecast in real time when the mining stocks are near an important turning point, at the present time, there are some very loud bells ringing that suggest yet another important bottom—possibly a major low—could be close at hand.
Above: Short Term Ratio of Total Up to Down Volume for Gold Stocks
In the chart above, I show a picture of the GDX ETF in the upper clip and my Short Term Up to Down Volume gauge in the lower clip. One of the wonderful features of an ETF like GDX is the ease of entry and exit, where the ETF virtually trades like water every day, averaging about 58 million shares turnover on a 90-day basis, down from a peak last June of around 89.3 million shares per day. For the Up to Down Volume gauge, the typical overbought and oversold parameters are overbought readings above 2.00 and oversold values below 0.50. Over the last five days, we have seen readings of 0.26 on Tuesday, June 20, 0.299 on Monday, June 19, 0.327 on Friday, June 16, 0.397 on Thursday, June 15 and 0.505 on Wednesday, June 14. In the 10,198 trading days seen since early 1977 (a period a little over 40 years for which data on this indicator exists) there have been only 136 trading days which have a value of 0.26 or lower. That puts the mining stocks currently in the 98th and almost the 99th percentile of oversold daily values.
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