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Why GDXJ Could Hit $35 Near-Term

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We sent a note to Daily Market Report readers to sell the balance of our miners on Tuesday and our trailing stop on GDXJ got tagged on Wednesday morning.

They held up relatively well yesterday with a late-day rally where GDXJ pushed into the morning gap.

These late-day rallies following a signal reversal bar (Tuesday) do a good job of tempting bulls in and squeezing out shorts looking for lower levels.

Often these late rallies are setups where shorts trade shorts with the shorts.

In other words because GDXJ didn't get hit hard yesterday, many shorts covered in the late rally.

However, a late day move like this into a gap is often a place where shorts trade shorts with the squeezed out shorts.

Today, the hook is in with GDXJ and the miners are gapping down.

I've seen this kind of pattern play out over and over again across the board.

The implication is that following Tuesday's reversal, the miners have some work to do into next week.

The $35 level which ties to the 20 day looks viable as potential downside.

Click here to learn more about Jeff Cooper's Daily Market Report.

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