Gold miners exchange traded funds have recently lost some of their momentum and that includes the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ).
Although GDXJ is still up 9.1% year-to-date, the ETF is lower by 4.6% over the past week. At the start of this week, five of the top 10 non-leveraged ETFs on a year-to-date basis were gold miners ETFs, including GDXJ. GDXJ remains on that list, but the number of miners in the top 10 has fallen to four. Still, GDXJ’s year-to-date gains have been halved in recent weeks, indicating the ETF finds itself at an important technical juncture. [A Bad Place for Gold Shorts]
The good news is GDXJ has been showing superior relative strength compared to the SPDR Gold Shares (NYSEArca: GLD), indicating the former could rally again before the latter, notes Deron Wagner of Morpheus Trading Group.
“In late December, GDXJ made a sharp move off the lows that lasted three weeks. Since peaking in late January, the ETF has been in pullback mode, and is now holding above its 50-day moving average but stuck just below resistance of its 20-day exponential moving average. After $GDXJ pops back above its 20-day EMA (above the $27.60 area), buyers should step in due to break of key moving average resistance, as well as a break of the downtrend line from the January high,” according to Wagner.
Important to GDXJ’s near-term fortunes is the ETF’sd ability to remain above its 50-day moving average, a line the ETF currently resides just 0.6% above. After falling below its 50-day moving average last August, GDXJ needed until the start of this year to get back above that line.