As you know gold and GDX have been pathetic and we have been on
the right side of the trade here.
However in the very short term they could be getting
oversold.
Currently the RSI 2 is at 1.80% on a daily GDX chart which
historically is quite oversold. If GDX was above the 200 day
MA, the changes odds of a bounce would be 100% based on historical
trades. However the GDX is currently well below the long term
200 day MA and is in a strong downtrend. So what are the odds
for a short term bounce? I tested this with my RSI 2
Reversion to the mean system code and here are the results: The RSI
2 has only closed below 2% 23 times in the last 6 years.
Exit the trade when RSI 2 closes back above 80%, or hold the
trade for a longer period of time if our momentum indicator is
positive.
the system scales into a trade in a total of 3 scale-ins of 40%,
30%, 30% - each scale in has to be at a lower (better) price than
the first entry.
The results are quite positive - 93% of the trades were winning
trades with the largest losing trade at 1.2%. However that said -
some of the trades had to take some heat before working out -
particularly the times when GDX was really in a strong down trend,
many times you got lower prices before GDX finally bounced.
Again I'm posting this for informational purposes only.
My students who have the Tradestation Systems - already have
this system and others on their computer
Note: The RSI 2 must stay below 2.2% by the close in order
for this system to take a long
the hits just keep on rolling for GDX. It is becoming more
evident in the last couple of hours that this isn't just a matter
of money leaving gold and going into the broad market. Or
maybe it was, but now that the broad market is following suit
(albeit for less than a 1% loss), GDX is accelerating down with the
market. I could easily see a 100 point SPX correction
here.... and I'm not sure what GDX would do in that case.
remember the wave count I showed on the weekend - I think if a
bounce does come, at best it will only be wave B of the complex
pattern for form a lower high, then will sell off again in the
summer.
The 2nd chart shows the commercial net short - it will be fun to
see what that number is this week! However the problem is
that this number will only reflect Tuesday's closing prices and
won't reflect today's move since the COT data is delayed by 3
days.
the third chart shows the monthly chart of gold with the long
term trendlines - as you my thought has been that we would
eventually test at least one of these uptrend lines - also watch
that 14 RSI and the 50% level, that has been super important for
gold since 2001
Newsletter
Subscribe to our email list for regular free market updates
as well as a chance to get coupons!
GDX RSI 2 quite oversold now
Posted by matt on 20th of Feb 2013 at 02:23 pm
As you know gold and GDX have been pathetic and we have been on the right side of the trade here.
However in the very short term they could be getting oversold.
Currently the RSI 2 is at 1.80% on a daily GDX chart which historically is quite oversold. If GDX was above the 200 day MA, the changes odds of a bounce would be 100% based on historical trades. However the GDX is currently well below the long term 200 day MA and is in a strong downtrend. So what are the odds for a short term bounce? I tested this with my RSI 2 Reversion to the mean system code and here are the results: The RSI 2 has only closed below 2% 23 times in the last 6 years.
Here's a link to the Performance Report showing detailed Statistics
system rules:
Go long GDX when RSI 2 closes below 2%
Exit the trade when RSI 2 closes back above 80%, or hold the trade for a longer period of time if our momentum indicator is positive.
the system scales into a trade in a total of 3 scale-ins of 40%, 30%, 30% - each scale in has to be at a lower (better) price than the first entry.
The results are quite positive - 93% of the trades were winning trades with the largest losing trade at 1.2%. However that said - some of the trades had to take some heat before working out - particularly the times when GDX was really in a strong down trend, many times you got lower prices before GDX finally bounced.
Again I'm posting this for informational purposes only.
My students who have the Tradestation Systems - already have this system and others on their computer
Note: The RSI 2 must stay below 2.2% by the close in order for this system to take a long
as confirmation - this GDX
Posted by matt on 20th of Feb 2013 at 04:58 pm
as confirmation - this GDX system did take a long at the close since the RSI 2 closed at 1.33%
GDX wow
Posted by elliotwav on 20th of Feb 2013 at 04:03 pm
http://stockcharts.com/h-sc/ui?s=GDX&p=W&yr=5&mn=0&dy=0&id=p84855804476&a=291842292&listNum=18
36.24 34.53 next ABC down
Posted by elliotwav on 20th of Feb 2013 at 02:24 pm
Gold 300?
Posted by zwyss on 20th of Feb 2013 at 02:30 pm
Can it get more negative than now? Too much gold bashing imho. Wouldn't be surprised to see a turn here....
the hits just keep on
Posted by kalinm on 20th of Feb 2013 at 02:56 pm
the hits just keep on rolling for GDX. It is becoming more evident in the last couple of hours that this isn't just a matter of money leaving gold and going into the broad market. Or maybe it was, but now that the broad market is following suit (albeit for less than a 1% loss), GDX is accelerating down with the market. I could easily see a 100 point SPX correction here.... and I'm not sure what GDX would do in that case.
remember the wave count I
Posted by matt on 20th of Feb 2013 at 02:51 pm
remember the wave count I showed on the weekend - I think if a bounce does come, at best it will only be wave B of the complex pattern for form a lower high, then will sell off again in the summer.
The 2nd chart shows the commercial net short - it will be fun to see what that number is this week! However the problem is that this number will only reflect Tuesday's closing prices and won't reflect today's move since the COT data is delayed by 3 days.
the third chart shows the monthly chart of gold with the long term trendlines - as you my thought has been that we would eventually test at least one of these uptrend lines - also watch that 14 RSI and the 50% level, that has been super important for gold since 2001