Gold Mining ETF's Upmove Has Legs

I have been watching the Market Vectors Gold Miners ETF (AMEX: GDX) closely since its October low at 15.74 and I am very impressed with its pattern and relative strength vis-a-vis the overall market and the gold price action itself.

On Nov 3, when the GDX was at 21.48, I noted to our subscribers that I was expecting a pop to the upside out of the 3-day sideways congestion area into new recovery high ground, which projects into the 23.50-24.50 target zone, after which I would be looking for a significant pullback (under 19.00) to set up a much more potent buying opportunity.

A view of the chart today shows that that green lines I drew nearly weeks ago appear to have closely demarcated the forthcoming new recovery high followed by the deep "give-back" beneath 19.00 -- actually to 17.79. Let's notice that yesterday's low was 12% above the October low, whereas yesterday the SPY broke the October low by 2%, which represents a significant outperformance by the mining group.

In addition, provided the potent upmove from yesterday has legs -- and can claw its way above the Nov 5 high at 24.72 -- the GDX has the makings of a meaningful double bottom pattern that projects to well above 30.00 in the subsequent weeks. As long as the GDX does not break below 20.00, my work will remain constructive.

Read more and view the technical chart analysis at http://www.mptrader.com/markets.php