The chart below of the gold miner's bullish percent index is often misread by many traders and trade off its information incorrectly. Many for example think this index is based on stocks trading above a moving average which is no correct.
How a bullish percent index is calculated is based on Point & Figure buy and sell signals with each individual stock within the sector and in our case the gold minders Market Vectors Gold Miners ETF (GDX).
How a bullish percent index is calculated is based on Point & Figure buy and sell signals with each individual stock within the sector and in our case the gold minders Gold Miners ETF.
Gold prices peaked in 20111 at $1923 an ounce when the gold mining stocks index was above 80%. Why is this important? Because gold stocks typically lead the price of gold in both directions, tops and bottoms.
As of today we have the reverse situation with the bullish percent index at 13% and showing bullish divergence from that of gold stocks. This is an early signal that the new gold bull market cycle is turning up and it should not be overlooked.Also we see the fifth and final Elliott wave pattern forming and we could once again whiteness another multi-year rally in the price of gold. Gold Mining Bullish Percent Index - Weekly Chart