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All Eyes Are on Gold...Everyone Is Missing the Rally Here

8/13/2013

1 Comment

 
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COMMODITIES CORNER

All eyes are on gold stocks right now as they should be.   Gold stocks are ripping higher. The rally I told you about in the gold sector is well underway.

The Market Vectors Gold Miners Fund (GDX) is up 16% in just the past three trading days. It's trading above its 50-day moving average (DMA). Over time, GDX should move up toward its 200-DMA, near $35.   But it's not just the stocks of companies mining the shiny yellow metal that are on a tear. Coal stocks are rallying, too.   Take a look at this chart of the Market Vectors Coal Fund (KOL).
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Just like the gold sector, coal stocks have been under heavy selling pressure all year. KOL bottomed six weeks ago, down about 35% for 2013. But now the chart has formed a double bottom (or "W" pattern) – a bullish sign.   A "W" pattern is the opposite of the "M" pattern I showed you last week.

It occurs at the end of a downtrend and often signals the beginning of a longer-term uptrend.  KOL has also popped above its 50-DMA (the down-sloping blue line) which had been resistance for the stock all year.

Remember, most technical analysts view the 50-DMA as the line in the sand separating intermediate-term uptrends from intermediate-term downtrends.  So stocks trading above the 50-DMA are considered to be in bull mode.  KOL should be able to work its way up toward its 200-DMA, near $22, over time.  

The sector is a bit extended in the short term.  That's normal, given the 10% rally over the past three trading days. So traders can look to buy into the coal sector on any pullback toward the 50-DMA , which should now serve as support. 
1 Comment
Shimin link
8/5/2023 01:48:03 pm

Thhank you for sharing

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