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.
Fundamental tests for GDXJ loom as well. Over the next five weeks, 23% of the Market Vectors Junior Gold Miners Index’s weight, GDXJ’s underlying index, delivers earnings reports. [Earnings Tests for Gold Miners ETFs]
Year-to-date, investors have added nearly $226 million to GDXJ.
Market Vectors Junior Gold Miners ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of GDXJ.