The selling pressure in the Gold mining companies (via Market Vectors Gold Miners ETF (ARCA:GDX) and Market Vectors Junior Gold Miners (ARCA:GDXJ)) continued well into the US trading close yesterday. Some of the biggest gold mining companies were down double digits, while the index itself also retreated by almost 11%. Most of the sector is now trading 4 to 5 standard deviations away from the mean. Price is confirmed by volume: daily GDX turnover jumped to a record, as retail investors scrambled to get out of the sector.
Remarkably, 76% of the index posted new, 52-week lows. Moreover, as we can see in the chart below, the Philadelphia Gold/Silver Index (XAU) is currently trading 30% below its 200 day moving average. When we take into consideration all of the above, this kind of selling pressure has only occurred a handful of times over the last two decades. It usually signals we are close to selling exhaustion.
Chart Of The Day: Gold miners are currently trading 30% away from its 200 MA!
