By David Banister
NEW YORK (Active Trading Partners) -- Gold stocks have been in another recent downtrend, which makes sense during a "wave 2″ correction in gold.
If we review the gold stocks ETF GDX (GDX) we can see a possible triple bottom formation. This one though looks bullish for a reversal trade to the upside near term as gold forms a C wave bottom.
This triple bottom looks like a series of higher lows should the 43 to 44 GDX ranges hold near term. The moving average convergence-divergence line is still trending down, but in very oversold territory as in the prior two lows that had massive rallies.Ways to play a reversal for the aggressive stock investor is the Direxion Daily Gold Miners Bull 3X Shares (NUGT) ETF, which is a 300% long leveraged ETF based loosely on GDX. The specific timing of entering NUGT is of course tricky and best saved for our Active Trading Partners trading service. That said, assuming gold does bottom at 1681 or 1631 near term, the gold stocks tend to lead the metal higher . . . so they will bottom before the metal. Below is the GDX long term chart showing what looks like an emerging tradable low: This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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