AN UPDATE ON THE GOLD-STOCK RALLY
Gold stocks just completed one of the strongest moves I’ve ever seenâ€¦
Over the past two months, gold stock investors have enjoyed tremendous gains.
The AMEX Gold Bugs Index (the “HUI”) is up a whopping 30% since bottoming in July. But after such a strong move higher, gold stocks are extended and in need of a restâ€¦
It ranges between zero and 100â€¦ Readings below 30 indicate a sector is “oversold,” and readings above 70 indicate a sector is “overbought.”
As today’s chart shows, the BPGDM fell below 10 in July â€“ signaling gold stocks were extremely oversold and due for a bounce.
When the BPGDM finally turned higher, it kicked off a massive gold-stock rally.
BPGDM soared as high as 72 on Monday, before turning lower on Wednesdayâ€¦ indicating gold stocks (like the metal itself) could be taking a short-term break before climbing higher.
â€“ Jeff Clark
Source: Market Notes