The GDXJ just moved below $36 and the JDST just moved above $12, and thus my binding exit price targets were reached.
Consequently, our short positions in junior mining stocks were just closed and you have probably just reaped great profits – congratulations! Please keep in mind that it’s most likely just a fraction of what’s to come, given the size of the move that’s just ahead.
Anyway, since the situation in the mining stocks now appears to be excessive – as it seems that they have declined too much too fast (on a short-term basis) – I think that long positions in the GDXJ ETF are now justified from the risk to reward point of view. I plan to hold those positions for about a week or so (maybe two weeks, but it’s too early to say at this time).
I’m going to provide more details regarding exit prices for the GDXJ ETF and JNUG in tomorrow’s analysis (as well as upside target for gold and silver), but at this moment it seems that the upside target for the GDXJ will be close to the $41 - $42 range (and then I expect another – much bigger – move lower to start). Again, that’s just an initial estimate – I’ll examine the situation more thoroughly and get back to you tomorrow.
Is it DEFINITELY the final short-term bottom for mining stocks? No, it’s not 100% certain, especially that today’s low for the S&P 500 is “just” ~3875, and the target is at about 3800. However, it still seems that the risk to reward ratio no longer favors a short position in the GDXJ but a long one. Please keep in mind that the last few pennies of a given trade can be the most costly ones (if one fails to exit the trade at all).
As always, we’ll keep you - our subscribers - informed.
Thank you.
Sincerely,
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief