I have been watching theMarket Vectors Gold Miners ETF (AMEX: GDX) closely since its Octoberlow at 15.74 and I am very impressed with its pattern and relativestrength vis-a-vis the overall market and the gold price action itself.
On Nov 3, when the GDXwas at 21.48, I noted to our subscribers that I was expecting a pop tothe upside out of the 3-day sideways congestion area into new recoveryhigh ground, which projects into the 23.50-24.50 target zone, afterwhich I would be looking for a significant pullback (under 19.00) toset up a much more potent buying opportunity.
A view of the chart todayshows that that green lines I drew nearly weeks ago appear to haveclosely demarcated the forthcoming new recovery high followed by thedeep "give-back" beneath 19.00 -- actually to 17.79. Let's notice thatyesterday's low was 12% above the October low, whereas yesterday theSPY broke the October low by 2%, which represents a significantoutperformance by the mining group.
In addition, provided thepotent upmove from yesterday has legs -- and can claw its way above theNov 5 high at 24.72 -- the GDX has the makings of a meaningful doublebottom pattern that projects to well above 30.00 in the subsequentweeks. As long as the GDX does not break below 20.00, my work willremain constructive.
