Trade of the Day: GDX Not Done Shining

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VanEck Vectors Gold Miners ETF (GDX) — I last reviewed GDX (formerly Market Vectors Gold Miners ETF) as the Trade of the Day on Sept. 24. I recommended readers buy shares of the ETF at $13.25 with a target of $18. GDX hit a high above $17 in mid-October before shares headed south, hitting a low of $12.40 in January.

But traders who hung tight were well rewarded. GDX achieved my $18 target on Feb. 11 and kept right on going, hitting a high just below $27 last week. And the party doesn’t seem to be over yet, as safety-seeking investors continue to pile into gold and mining stocks.

The top 10 holdings in GDX are Barrick Gold Corporation (USA) (ABX), Newmont Mining Corp (NEM), Goldcorp Inc. (USA) (GG), Agnico Eagle Mines Ltd (USA) (AEM), Franco Nevada Corp (FNV), Newcrest Mining Limited (ADR) (NCMGY), Silver Wheaton Corp. (USA) (SLW), Randgold Resources Ltd. (ADR) (GOLD), Kinross Gold Corporation (USA) (KGC) and AngloGold Ashanti Limited (ADR) (AU).

Turning to the chart, we see GDX broke from a consolidation and above its 200-day moving average at about $15 in early February. It quickly established a bull channel, which it traded in until late April when buyers thrust it through its upper resistance line at about $25.

GDX then quickly retreated to its 50-day moving average, where it triggered twin buy signals from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR). This was followed by a strong buy signal from the MACD indicator.

After a high-volume rally on June 3, buyers drove GDX up and through a quadruple recovery line at $26 to a high of $26.90 on Friday, the highest level in almost two years. On Wednesday, GDX reversed up from minor profit-taking — a bullish sign.

Traders should look to buy GDX around $26 with a target of $30 for a potential gain of about 15%.

GDX Chart
Click to Enlarge

Chart Key


Article printed from InvestorPlace Media, https://investorplace.com/2016/06/market-vectors-gold-miners-etf-gdx-trade-day-2/.

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