While there is growing concern for a correction in Gold and gold stocks, the evidence is lacking. The GDX advance decline line signaled a breadth thrust for only the third time in the last 11 years. After the other two thrusts, GDX gained another 20% and 60%. A breadth thrust is a burst of extremely strong participation after a bear market, correction or larger downtrend.

    Other breadth indicators, such as the percentage of stocks above the 200-day moving average and new 52-week highs show the gold stocks have room to run before they get too overbought. Strong breadth is a very bullish signal when it first occurs. After it persists for a while, the market is at risk for pausing or moving lower.

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    7 Comments

    1. Makes sense. Nobody is even talking about gold and and gold stocks in the media. 15-20% is realistic.
      Also previous breakouts over 2000 were very short and there was a large immediate pullback. This breakout seems to hold longer.

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