Mining Stocks Face Short Term Pressure

Recently the gold mining stocks have been under pressure after making a new high in December 7th, 2010. The popular Market Vectors Gold Miners ETFGDX traded as high as $64.62 on December 7th and is trading around $60.27 this morning. Normally after a stock or ETF makes a new high it will need to pause or consolidate the gains before trading higher. However, this time around the GDX has sold off and traded below the November 9th, 2010 top. When price action fails to hold the prior top or high it is usually an indication that a further correction is likely to take place. The GDX will have short term daily chart support around the $59.00 level which is the daily chart 50 moving average. The next important support level and likely bounce area for the GDX will be around the $57.50 area. The highly popular Market Vectors Junior Gold Miners ETFGDXJ is following a similar pattern to the GDX. This highly popular ETF will have some daily chart support around the $38.50 which is the daily chart 50 moving average. However, should the momentum push the ETF below this level the GDXJ will have strong support around the $37.25 area. Yamana Gold Inc.AUY is a leading gold mining stock that made new highs for the year on December 7th, 2010 at $13.13. Since that time Yamana Gold Inc. has pulled back to $12.16. This stock is still trading above daily 20, and 50 moving averages which tell us that the stock is still in a strong technical position. Yamana Gold will have minor short term support around the $12.00. The $11.50 area is the daily 50 moving average and this should be fairly strong and a possible bounce level. Nicholas Santiago Chief Market Strategist www.InTheMoneyStocks.com