The gold miners (Market Vectors Gold Miners (N:GDX)) rallied for a 6th consecutive trading session yesterday, making for a 14.5% gain since last Tuesday’s all-time low at $12.40:
GDX (Daily)
Over the last few years, a six session winning streak in GDX has happened only twice (August 2014 and May 2015) and both times turned out to be major tops with price quickly tumbling lower over the next few months:
GDX (2014-2016)
There’s a few key differences between the current six session winning streak and the last two:
- The current win streak is coming off an all-time low while the last two came at the end of multi-week rallies
- Upside volume is much stronger in the current rally
- There are several individual gold mining stocks that have broken out from bullish bottoming patterns, Barrick Gold (N:ABX) for example:
H&S bottoming pattern with breakout from extended cup & handle – strong volume on the breakout with measured move target of $11 and open gap up at $11.41.
GDX certainly doesn’t have a good track record following 6 session winning streaks, however, there is ample evidence to suggest that conditions are much different now than they were the last couple of times.