Traders take a note from Jeff Clark: Gold stocks are ready for a quick bounce.
In his morning e-mail for traders, our colleague noted how the recent market decline has punished gold stocks far worse than your typical sector... producing a trading opportunity.
You see, a market moves in waves. While these waves are impossible to accurately predict, they do have a tendency to stage "rubber band" snapbacks after big moves. As you can see from today's chart, the big gold stock fund (GDX) just suffered a big move. It's down 16% from its January high.
Now look at the "pane" at the bottom of the chart. This displays an indicator called RSI. This indicator simply measures how "stretched" an asset is to the upside or downside. Note how gold stocks rally each time the RSI dips into "oversold" territory (red arrows). Now note that gold stocks are as oversold and abandoned as they have been in a year. Expect a rally soon.
In his morning e-mail for traders, our colleague noted how the recent market decline has punished gold stocks far worse than your typical sector... producing a trading opportunity.
You see, a market moves in waves. While these waves are impossible to accurately predict, they do have a tendency to stage "rubber band" snapbacks after big moves. As you can see from today's chart, the big gold stock fund (GDX) just suffered a big move. It's down 16% from its January high.
Now look at the "pane" at the bottom of the chart. This displays an indicator called RSI. This indicator simply measures how "stretched" an asset is to the upside or downside. Note how gold stocks rally each time the RSI dips into "oversold" territory (red arrows). Now note that gold stocks are as oversold and abandoned as they have been in a year. Expect a rally soon.
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