Petra Hess of PetraPicks.com says over the last five years, gold stocks have put in a December low leading to a year-end rally of at least 37 percent and as much as 139 percent, so she is looking to see if there is a bottoming pattern in gold miners right now that could lead to a continuation of the five-year trend she has identified. Specifically, Hess is watching the Van Eck Vectors Gold Miners ETF (GDX) and Van Eck Vectors Junior Gold Miners ETF (GDXJ). For the GDX, she noted that the ETF put in lows in March, May and July at the $21 level, or about 50 cents below current levels; she is hoping for a small drop from here so that she could see a fourth bounce or a bottoming pattern and a hold above the 8-day exponential moving average. She’s also looking for a bottoming pattern on GDXJ, and noted that the junior miners typically are the first to rally and that they are closing in on their 8-day exponential moving average.
If she sees right moves in gold stocks, Hess says she will jump into the ETFs expecting moves of more than 10 percent to get to the 50-day moving average level, noting that a break through those levels could trigger a breakout of another 15 to 20 percent, for the roughly 35 percent run-up she is hoping for given the December trend in recent years.
Petra Hess runs PetraPicks.com and is a technical swing trader and long-term investor in domestic and Canadian stocks and ETFs. At the time this interview was taped on Dec. 11, she had no shares, options or open orders in GDX or GDXJ, though she was watching the ETFs as described in the conversation. The Raging Bull podcast features experts from the site talking with financial journalist Chuck Jaffe on his show, “Money Life with Chuck Jaffe.” You can learn more about Chuck’s daily hour of market and personal-finance chat at MoneyLifeShow.com; you can subscribe to the Raging Bull podcast via iTunes and other podcast providers.