Gold is trying to put on a move, getting a push again this morning. My focus yesterday was on the metals, but I think a look at the miners is warranted. The challenge here is that so many of the charts look the same. While this can be a challenge for traders, it is a positive for the more casual investor or part-time trader. While equities cling to support here, traders who are looking for a stronger chart may look to gold and its miners, and since many of the charts look the same, the gold miners' ETF is one way to go.
The Market Vector Gold Miners (GDX) looks to be breaking out this morning. There is a bullish crossover on the eight- and 21-day simple moving averages. Take a look back to the strong move in June on this same crossover. In fact, we see similar patterns in the commodities channel index (CCI) and relative strength index (RSI) from June. The only concern is the lack of a push in the money flow index (MFI), but there is enough here to take a shot on the long side. A stop of $25.65 on the daily chart would be my focus.
When it comes to individual names, I do like charts such as Goldcorp (GG) and Silver Wheaton (SLW). Note that these charts resemble GDX quite well. While price has broken out of a wedge, there is one concern, which is the highs from July. It was a slightly higher volume day, but this resistance should only be temporary. Still, it is worth noting. I would imagine that several shorts have stops just above this level or may look to be aggressive sellers around that resistance. Fortunately, it is a close price level, so traders should know quickly if it is going to work against them.
Instead, look a little more off the beaten path to names such as Eldorado Gold (EGO) and Franco Nevada (FNV). Both names are stronger on the MFI as well as the momentum indicators. While Franco Nevada needs to see another push higher in the MFI, there is already a breakout in price with no resistance in sight. Eldorado is stronger in the MFI action, but it still has resistance about 1% away from the current price.
For the more aggressive trader, I like adding a small mix of these two names with GDX. Franco Nevada is a 5% holding in the GDX, so I would simply be overweighting one of the strongest charts in the GDX. Also, a trader is getting plenty of Goldcorp and Silver Wheaton with a GDX holding, as Goldcorp holds the top spot and Silver Wheaton is just a couple behind.
