This ratio compares the NYSE Composite Index to the Market Vectors Junior Gold Miners (ARCA:GDXJ). When the ratio is moving higher the NYSE is reflecting relative strength to the small mining stocks. Over the last year the ratio has stayed with a uniform rising channel.
Testing Support
At this time the ratio is testing rising channel support and may have created a bearish head-and-shoulders topping pattern.
We also have to look at it this way -- Support for this ratio is at hand!
If, in fact, the ratio breaks below rising channel support, the message should be bullish for mining stocks.