It’s Not Demand, It’s A Squeeze

GDXJ, Price Reversal Imminent ?

With gold sector pundits bloviating, the ever-present challenge is to cut through the bilge and see what price action’s actually doing.

Stepping away for a few days, then taking another look at the charts, has yielded some potential insight into what’s really going on.

Junior Miners, GDXJ:

The first chart shows GDXJ, in the top panel with Force Index, in the lower.

Note the Force/Volume spikes … after the demand is satisfied, price collapses … at least on the first spike; we can’t say for sure the outcome of current action.

Price spikes and volume that subsequently collapse; the textbook definition of a short-squeeze.

There’s no real bullish demand or price would launch into a bull run.

The second chart highlights the areas in question.

The last chart gives one more clue that price may reverse from current levels.

Not only do we have a potential squeeze, but we’re also contacting an established trend line.

It looks like the squeeze is over. Volume has dropped significantly and price is up against established (trend) resistance.

Gold Higher, Miners Lower

Discussed many times, it (almost) doesn’t matter what gold is doing. It can go higher and yet the miners go lower.

We won’t know exactly why until it’s all over; one possible explanation’s that corporate collapse is already baked into the cake of the major equities …

Summary:

Remember their tagline, “We’re all in this together”.

So they are.

All major corporations implementing self-destruct (sustainability) policies … all of them doing it, ‘together’.

Stay Tuned

Charts by StockCharts

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