The mining stocks are plunging once again today and GDX moved below the December 2017 low just several minutes ago. Consequently, you might be wondering if this is a good time to exit our short positions and take profits off the table.
In short, we’re keeping the current short positions intact for now. It seems that we’re getting close to the moment of taking profits, but that we are not at it just yet. Miners are underperforming gold to a huge extent even though the general stock market is not yet massively lower. At least not compared to this week’s declines. Consequently, it seems that we can view miners’ underperformance as a bearish sign.
It could be the case that the miners correct along with the main stock indices and the latter are after a major breakdown below a rising support line. Their likely target is considerably lower (at about 2470 for the S&P 500), so it could be the case that miners’ downside potential is still considerable in the short term.
Gold and silver are relatively close to their support areas (as marked in today’s first Alert and as described more thoroughly in yesterday’s alert), but they have not yet reached them. Consequently, they have room for further declines in the near term.
As always, we’ll keep you - our subscribers - informed.
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager