Gold (GDX) About to ‘Free Fall’?

What A ‘Surprise’, If GDX Breaks Down Into A Collapse

Gold and the dollar are still inversely correlated.

The dollar developed a bullish set-up starting around May, of this year.

Since that time, its been in rally.

The last update on the dollar was this one, August 4th. Indeed, the dollar has continued its move higher.

Since we have negative correlation, gold and the miners have moved lower.

Each sector is now at a critical juncture:

A resistance area in the case of UUP and support (blue line) in the case of GDX.

The market has alternated (weekly GDX, above) from choppy overlapping moves, to smooth downward thrusts.

If GDX breaks substantially lower, get ready for cries of ‘manipulation’ and ‘it’s all rigged’.

Possibly more important, such a downdraft may cause an instant change in market sentiment; from ‘risk on’, to ‘risk off’.

In that case, a market’s that’s well positioned to head decisively lower, the fastest, is biotech, SPBIO.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

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