For a couple years, I have pretty much ignored gold stocks with only taking on the occasional position. Until recently, when I added to GDXJ and SLW. Gold and Gold stocks have been in a huge up move, with most companies moving 50-100% over the last 5 weeks. I believe that on Friday we could have seen a short term peak. Lets take a look at some of the larger companies along with the GDX.
Barrick has moved over 100% since its bottom. It has significant resistance at these levels and is likely to have a short term correction back down to the 10.50 to 11.50 zone.
Newmont Mining has recently moved from 16 to a high of 28, a 75% move in just a couple weeks . As you can see, NEM has significant resistance at these levels and is likely to have a short term correction back down to the 22 to 24 zone.
Franco Nevada has recently moved from 42 to a high of 61.50, a 46% move in just a couple weeks . As you can see, FNV has significant resistance at these levels and is likely to have a short term correction back down to the 51 to 53 zone.
GG looks to have the same resistance at these levels.
Here is what I believe could happen over the coming weeks. The gold stocks are seriously overbought and on Friday we got a nice shooting star candlestick. Now we just need confirmation with some lower prices next week. On Friday, I reduced my exposure to GDXJ along with taking on a position in DUST at 3.30 to hedge out the rest of my gold stocks. I took the position early on in the day because of the gut feeling that I had; that we would get some sort of reverasal based up on the chart resistance levels above on ABX, NEM, FNV, etc. Already that position is up over 15%, with it closing 3.88. I plan to cover that position on the first support zone shown above.