Since my Sept 24 article on MarketWatch, "Believe it or not, gold miners are starting to glitter," the GDX has climbed to 15.64 from 14.27 (+9.6%). Traders anticipating the climb in the miners have done very well in our trade set-ups like Direxion Daily Gold Miners Index Bull 3X Shares (NUGT) and Freeport-McMoRan Inc. (FCX).
More so than at the time since my article, my technical work argues that the miners as well as the oil and gold commodities have established significant lows, and are bottoming ahead of a meaningful recovery period. Bear trap lows amid glaring positive momentum divergences in gold and oil, as well as in the CRB Index, are technically significant and alerting us to a possible watershed shift in market perceptions -- and shift in capital flows into the commodity sector from equities and perhaps from the bond market as well.
Spot gold has been carving out a 2 1/2 month basing area, which so far has left behind a bear-trap low. In addition, all of gold's action since July 2013 can be viewed as a falling wedge formation, which makes for a potentially powerful upside reversal.
Oil has turned up after breaking below its December 1998 support line at $46.80 and pressing to a multi-year low at $37.75 in the NYMEX futures. The plunge was not confirmed by my intermediate-term momentum gauge, and provided a glaring positive divergence, pointing to both a bear trap and a major momentum non-confirmation of the weakness.
As for the miners, they are participating meaningfully in the powerful SPY rally off its 9/29 low, but while the SPY continues to exhibit distribution top characteristics in the aftermath of a longer-term bull phase, the miners are emerging from a longer-term bear market and a nearer-term base pattern.
Watch for the GDX to hurdle and sustain above its prior rally peaks at 16.16 (and the GDXJ above 22.75) to begin to inflict some significant technical damage to their entrenched bear trends.
From a macro perspective, watch for the U.S. dollar to roll over into a period of weakness, fostered by a Federal Reserve reluctance - refusal -- to hike interest rates in the upcoming months. Yes, the Fed wants oil and gold prices, and commodity prices in general, to rise, in order to nudge higher inflationary expectations. And gauging from what the charts are saying, the markets will comply with Yellen's wishes.
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