Gold Mining Stocks Are Surging...and Have a Lot To Prove



After being left for dead, companies who mine the barbarous relic have made a comeback. Gold mining stocks are showing a thrust in medium-term trends, but longer-term trends remain poor. That has preceded mostly negative returns for the HUI Gold Bugs Index.

Less than a month ago, fewer than 5% of gold mining stocks traded above their 50-day moving averages. With a surge in gold prices in recent weeks, miners got bid, and several days recorded more than 85% of the stocks trading above their averages.

Gold miners above their 50 day average has spiked

When these stocks have cycled like this, from few to most of them trading above their 50-day averages within 30 days, the sector showed mediocre returns. It rallied most of the time over the next 1-2 months but then often saw those gains peter out. Over the next 6 months, the average return was a woeful -4.4%.

We also looked at medium-term breadth thrusts when few stocks traded above their 200-day moving averages. And times when most of the stocks were emerging out of bear markets. Forward returns were not encouraging.


What else we're looking at

  • Full results after breadth thrusts in gold miners
  • What happens when miners end a long streak with more than 75% of stocks mired in bear markets
  • The S&P 500 is about to enter a "power period"
  • What momentum in the S&P equal-weight index means for future returns

Stat box

The S&P 500 Equal-Weight Index, which gives equal weight to each of the 505 stocks in the index, just ended a streak of 10 consecutive positive days for only the 2nd time in a decade (October 5, 2017, was the other).

Etcetera

Transportation stocks are really moving. Over the past week, the Optimism Index for the IYT fund has averaged more than 83%, among the highest in 5 years. There is often a burst of optimism like this after emerging from a prolonged downtrend.

Optimism is high on transportation stocks

Brazil waxed. Sentiment on Brazilian stocks is morbid and getting even worse. Over the past 100 sessions, the Optimism Index on EWZ has dropped near 40%, among the lowest levels in a decade.

Long term sentiment on brazil is very low

Around the globe. Our Optimism Index Geo-Map shows that Brazil is one of the few countries where investors show low optimism (green color).

Sentiment around the world

The post titled Gold Mining Stocks Are Surging...and Have a Lot To Prove was originally published as on SentimenTrader.com on 2021-10-27.

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