Sunday, December 6, 2015

Gold Stocks are displaying positive divergence:

On my last post I explained divergence and the divergence setup between crude and the U.S dollar. This time I look at the divergence setup between the gold miners and the U. S. dollar.

Our chart today is the daily closes – as of last Friday - of the Market Vectors Gold Stocks ETF (GDX) plotted above the daily closes of the US dollar index as replicated by the PowerShares ETF (UUP). The technical assumption here is that the two have an inverse relationship. So, when the UUP prints a new trading high at (B) relative to the old high at (A) - we expect the GDX to print a new low at (B) relative to the old low at (A). Clearly this did not occur – note the slightly higher GDX gold miner low at (B) which is a positive divergence condition creating a bull setup signal for the GDX. Keep in mind this is a daily or short term signal and short term trend reversal studies can generate false signals.


Shawn Severin said...

Do you think we're in a global bear market? Where do you see the S&P 500 at the end of 2016?


Shawn Severin said...

Hi Bill,

Can you do some analysis on US health care & biotechnology? Do you see them resuming leadership in 2016-17?

Also, where do you think US small caps & mid caps are relative to the S&P 500? Will they return to a leadership position?



PS. Your Nov 6th BNN analysis was excellent. said...

Hi Guys

I think a bullish 2016 with the TSX outperforming the S&P500

Health Care is still OK and the smaller caps should be strong through 2016

I would be cautious on consumer and strong on industrials

Bill C