Yesterday the Fed concluded its two-day meeting with a press conference that indicated that they were likely to refrain from any further rate increases this year.
This led certain markets to end a volatile day with some interesting patterns that created great trade opportunities.
Today’s trade idea is a simple setup that is often an easy entry at the beginning of major trends
As stocks were topping in September of 2018, Gold was bottoming.
When stocks bottomed in December of 2018, Gold continued to rally.
Rather than play the metal, I think the gold miners ETF (GDX) is a better bet.
As you can see by the chart below the GDX has recently had its 50-day moving average cross over its 200-day. This is often referred to as a “Golden Cross”.
I don’t use this a timing indicator, but it is a significant bullish development.
I have found that a better pattern to look for to identify timely trade ideas is the first retracement to the 50-day after the Golden Cross.
As you can see in the chart, this retracement occurred at the beginning of the month.
Yesterday GDX retested the 50-day and then closed over 4 days of consolidation.
As a result, yesterday’s range now serves as the range to trade around.
In other words, if GDX breaks out over yesterday’s range, it should be the beginning of then next leg up in GDX.
The stop for this trade should be under yesterday’s low.
More specifically, a good breakout occurs over $22.80, and the stop should be under $21.70.
I could spend a lot of time talking about all the potential catalysts for gold to rally, but the most compelling reason is that the technical setup as measured by the 50 and 200-day averages is as bullish as it’s been since March 2016.
Rick Nartarian, Chief Investment Officer
The American Investor Daily