HOUSTON -- Trading in the small and nano-cap resource-related companies we love to game here at Got Gold Report, has been looking up since the turn of the calendar into 2012. The chart just below is exactly what a reversal in trend looks like at the beginning. The chart is of the Market Vectors Junior Gold Miners Index ETF or GDXJ and it is a good proxy for the companies we affectionately call The Little Guys. It also happens to have been our Top Pick for 2012 in Steven Halpern’s TheStockAdvisors.com event published just after the New Year.*
(GDXJ, 2-years, daily, showing a potential reversal now underway with the trading approaching a former congestion area – potential near technical resistance between $30 and $32.)
So, is this the beginning of the long-awaited reversal of trader sentiment and the beginning of a positive liquidity event we have been expecting for The Little Guys? Only time will tell, but if we are going to see a change in sentiment; if we are going to see a technical reversal from a long, protracted negative liquidity event into its mirror image, this is exactly the kind of technical signature we might have looked for.
Note please, that the GDXJ fetched up in the expected zone of “support” and as it did both of the momentum indicators were showing clear positive divergences (the RSI and the MACD shown). Note also, that the GDXJ cleared the down trend line (DTL) and the 50-day moving average (50-dma) without correcting there – a bullish omen.
Here at Got Gold Report we track on technical charts something on the order of 60 small resource companies, all of which are or were a recommendation of the various resource company Gurus we follow – the best of the best independent research minds on the planet for this tiny sub-sector, as it were. Gurus famous for getting in and finding the undiscovered miners and explorers ahead of the pack – before the momentum crowd gets involved.
We share about 35 to 40 of those graphs with our Vultures (Got Gold Report Subscribers), under the banner “Vulture Bargain Companies of Interest” or VBCI issues. As we look down through the list of our VBCI issues today, at the end of January, we do indeed see improvement in the chart signatures for issue after issue, hinting that at least a small measure of tentative confidence is returning to this badly beaten up space.
While we cannot yet definitely proclaim to the Four Winds that a sure-enough reversal has indeed arrived, we definitely can point to a promising looking beginning to one.
What we can say with more than a little confidence is that from the very low, panic levels that many of our Guru-chosen small miners and explorers were driven to in the October-December near panic and horrible tax loss selling event; from the depths of the hellish negative liquidity event of 2011, it really doesn’t take all that much buying pressure to move these promising junior miners – in quite large percentages.
As just one example of many, consider the short-term chart just below for Argus Metals, a VBCI company and actually one of our fully fledged Vulture Bargain (VB) issues, chosen Dec. 9 at C$0.06.
(AML.V volume candle chart since December.)
From the depth of the nasty tax loss selling trough in December, Argus has doubled. It has done so on pretty convincing volume too in our view.
Just below is a very much reduced snapshot of the chart of Argus that we share with our members. It is provided to put the volume candle chart above in context. Clearly we can say that Argus is attempting a reversal of both sentiment and confidence as we close out the first month of 2012.
(Our VBCI chart for AML.V. This is actually a huge chart that fills a computer screen and then some, so it may not be completely legible. However one should be able to see how the potential reversal looks to be forming today.)
Argus is representative of a number of our “Faves.” So far so good and “steady as she goes…”
That is all for now but there is more to come.
*To view our full Top Pick for 2012 article and some of the reasons we chose GDXJ as our 2012 workhorse please follow this link.
A land developer, professional numismatist, self-taught bullion trader and investor since 1980, Gene Arensberg analyzes technical and fundamental developments in the precious metals markets. In 2000 Gene started sharing his own market research with fellow traders and fund managers. Those email reports evolved into his popular Got Gold Report, a biweekly look at important indicators for gold and silver published on the web. Gene's more in-depth market reports, insights and trading ideas are available atwww.GotGoldReport.com.
