Normally one would think that a 7.34% rally on enormous volume would be a bullish sign for a stock or sector. However, the last couple of times that GDX posted a huge rally on 120+ million shares price was considerably lower 2 weeks and a month later:
GDX (Daily)
There are a couple of other similarities between today’s rally and the August 12th and October 14th rallies:
- Touched or closed above upper 2-standard deviation Bollinger Band
- Large full bodied candlesticks with closes at or near session highs
While I still believe that this time is different for the gold miners, it is probably time to curb your enthusiasm at least in the short term after today’s emotional upside blow-off.