Figure 1 is a weekly chart of the Market Vectors Gold Miners ETF (symbol: GDX). The pink and black dots represent key pivot points or areas of support (buying) and resistance (selling). There are two bearish signs that point to GDX forming a market top.

Figure 1. GDX/ weekly

Bearish sign #1 is the double top.

Bearish sign #2 is the fact that prices are trading below the most recent key pivot point or support level at 49.49 (see black up arrows). This level is now resistance. A weekly close above this level would negate this analysis. Of note, back in 2008 there were several reversals around key pivot points before a close below support leading to a waterfall decline.

When we put these two signs together, it appears that GDX is making a market top. A break below the rising trend line on the graph would be added confirmation. If this were to develop, GDX should trade to the next support level at 41.83.

By Guy Lerner

http://thetechnicaltakedotcom.blogspot.com/

Guy M. Lerner, MD is the founder of ARL Advisers, LLC and managing partner of ARL Investment Partners, L.P. Dr. Lerner utilizes a research driven approach to determine those factors which lead to sustainable moves in the markets. He has developed many proprietary tools and trading models in his quest to outperform. Over the past four years, Lerner has shared his innovative approach with the readers of RealMoney.com and TheStreet.com as a featured columnist. He has been a regular guest on the Money Man Radio Show, DEX-TV, routinely published in the some of the most widely-read financial publications and has been a marquee speaker at financial seminars around the world.

© 2010 Copyright Guy Lerner - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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