Courtesy of Chris Kimble.
If one is to be buy and hold Gold mining stocks, one prefers to see Junior Miners acting stronger than Senior miners. Since 2011, the Junior/Senior Miners Ratio (GDXJ/GDX) continues to create a series of lower high and lower lows.
The rally in the miners since the first of 2016, has the ratio testing the top of a 6-year rising channel of late.
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To be long and strong mining stocks, one wants to see the ratio breakout of the red shaded falling channel.
The past three weeks, the ratio has created reversal patterns (bearish wicks) at falling resistance at (1). So far this week, the ratio is creating a large bearish reversal pattern. This is taking place just below 6-year falling resistance.
If weakness continues in the ratio and it breaks support at (2), it would be sending a risk off message to the mining sector.
Full Disclosure- Premium and Metals members bought GDXJ on 12/27/16 and sold into strength. No position at this time. Will be looking to short miners on a breakdown.
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