Direxion Daily Gold Miners Be (DUST)

[Sgreg]

Easiest way to explain it would to be to just talk about the recent moves. Basically recent moves are all because the bank of Japan. They did not go into further negative rates and held steady. They didn't do more stimulus also and investors were expecting them too. This caused a selloff in Japan equities but we are in a global market so it rippled to other equities markets.

Also because Japan chose not to dive deeper into the negative rate abyss it strengthened the Yen big time and made it go up a lot. The Euro also has gone up a lot the last couple of days. The dollar has been smashed. Gold is priced to the dollar so when the dollar does down it gives a big boost to gold. Also since the world markets have had a bad couple of days that also gets people to buy some gold.

Bottom line though is GDX and GDXJ are very overbought at this point in time. They will have a correction at some point. The correction will come when people who hold mining stocks decide to sell some. Charts show that there was not a lot of heavy resistance for miners to this point but the charts show very intense resistance in mining stocks if they go up another 5% or so.

At the same time gold will probably peak for this half of the year coming up soon. The reaction to send the Yen and Euro way up and the dollar way down have now entered over-reaction phase. That too will correct and the dollar might stabilize.

My opinion is that GDX goes to $27 and the dollar/Yen/Euro reaction stabilize and gold/silver cools off and these all culminate at around the same time. With the massive resistance GDX will have at $27 and it needing a major correction after going up for 4 months straight these things will culminate and result in GDX finally getting that strong correction.