Trying to time the market can be a tricky business. At Market Inflections, we use a sophisticated barometer to measure extreme investor behavior.
You might be familiar with the ‘Buy and Sell Signals’ which we often post on social media. However, you may not be familiar with the software’s “compression” signals which predict when new persistent trends are about to begin. Typically, these signals result in an expansion of volatility and oversized price moves.
Our Market Timing Software just generated such a signal on the weekly chart of the Van Eck Gold Miners ETF (NYSEARCA:GDX). The analysis that follows was published earlier this week in our weekly newsletter and we are pleased to share it with you today.
Gold Miners (GDX) “Weekly” Chart – Compression Signal
In June 2015, our Market Timing Software generated a bottom signal on the weekly chart of the Van Eck Gold Miners ETF when it was trading at $12 per share. Within twelve months, it almost tripled until a Minor Sell signal triggered which resulted in the Miners shedding a third of their market cap. Last week, our Market Timing Software generated a compression signal which suggests that a new persistent trend is about to begin which should last through October 2018. A daily close below 20.54 would suggest a new downtrend is underway, while a close above 24.58 would mark the beginning of a new uptrend and Gold Miners buy signal.
So how should you trade this signal? We have two recommendations:
- A Straddle or Strangle is the perfect options strategy for this signal. By buying an equal number of puts and calls, you will profit from any sizable move out of the current price range.
- Get long on a daily close above 24.58 / get short on a daily close below 20.54.
If you’d like to learn more about our Market Timing Software and subscription services, please visit our website at www.marketinflections.com.
Twitter: @larryfooter @mktinflections
The author is long GDX calls at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
