Miners ETFs Could be Ready for Another Rally
June 18th, 2014 at 2:00pm by Todd Shriber
After being drubbed since peaking in mid-March, gold miners exchange traded funds are rebounding with some members of the group ranking among June’s top-performing ETFs.
Just look at the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ), the second-largest gold miners ETF. Entering Wednesday, GDXJ was sporting a June gain of 14.3%. Its large-cap counterpart, the Market Vectors Gold Miners ETF (NYSEArca: GDX), the largest gold miners ETF by assets, entered the day with a June gain of almost 8%. [Junior Miners ETFs Rebound]
Technicals are improving for those ETFs and others. Last week, GDXJ and the PureFunds ISE Junior Silver ETF (NYSEArca: SILJ) rose above their 50-day moving averages for the first time since the first quarter. GDXJ is now comfortably above both its 50- and 200-day lines. SILJ entered Wednesday with a June surge of almost 17%. [Small Silver ETF Surges]
“Last week a strong rally took place following a positive power of the pattern set up in the mining complex, with several mining index’s moving 10% higher in five days,” Chris Kimble of Kimble Charting Solutions. “Did last week’s rally confirm that the bullish inverse head & shoulders pattern is completed? Not yet in my humble opinion. So far I like what I see. I am sharing other resistance levels with member that I feel are key to keep this pattern going.”
Kimble’s technical analysis of GDX is important as he was one of the first technicians to spot a bottom in the ETF early this year. From the time of an ETF Trends interview with Kimble in mid-January on the subject to its March peak, GDX surged 18.4%. [Major Opportunity in Mining ETFs]
Leveraged mining ETFs are also rewarding adventurous traders this month. Direxion’s two best bullish triple leveraged ETFs to this point in June are the Direxion Daily Junior Gold Miners Index Bull 3x Shares (NYSEArca: JNUG) and the Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT).
JNUG and NUGT came into Wednesday with June gains of 42.4% and 22.9%, respectively, according to Direxion data.
Over the five trading days ending June 17, JNUG’s volume swelled 37% above the trailing 20-day average and both JNUG and NUGT have seen creation activity over the past month, according to issuer data.
Direxion Daily Gold Miners Bull 3X Shares
Tom Lydon’s clients own shares of JNUG.