In my previous article Update: GDXJ – Potential End of Long term Decline I discussed the recent uptrend of the junior minors fund. Since that time the fund has had a significant decline and is now approaching a major inflection point.
As you can see in the chart below, the fund has been in a near term rise, trying to break from from its long term decline. The latest peak was (just barely) higher than the previous (and first) peak during the reversal (top green line). Each low in the uptrend has also been higher than the previous (lower green line). So technically GDXJ is still in a near term uptrend.
However, at its current position after this most recent decline, the fund/sector is headed towards the previous low (the blue line in the chart above). If, going forward, GDXJ crosses the previous low of this near term uptrend, it will break the uptrend and will therefore likely head down (due to market forces) to create new lows. If it doesn’t break below the previous low, it will likely start heading upwards for a new higher high.
So the next phase of this market segment will be interesting.
What do I think will happen? … I have no idea. The market is random in the short term.
I do think this is a great time to start getting involved in this sector, if you haven’t already. If the sector/fund does create a lower low, the day traders will likely short it down to a new low, giving you opportunities to work on increasing your position to build a solid long-term base.
If it heads back up from this point, you’ll have gotten involved at a great entry point, as in the grand long-term picture, this sector is highly undervalued and should get some fantastic long-term gains.