The gold miners took a beating today in the form of a 7.90% decline on more than 2x average daily volume. Aside from the already mentioned bearish implications of a decline of this magnitude, the backtest results for declines on at least 2x average daily volume for GDX are notably bearish:
Backtest results are bearish on all time frames with especially bearish results 5 and 10 days from today’s close. In addition, the last 3 times that GDX has suffered one day declines of 7% or more on heavy volume prices were lower each time 3 days later and one week later:
This time is different in that GDX is in a broader uptrend for the first time in many years. However, that could also mean that GDX has further to fall before finding a robust level of support. Only time will tell, although it certainly doesn’t look like investors should be in a hurry to ‘buy the dip’ in the goldies.
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