GDXJ: Case Study in Capitulation

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GDXJ case study in capitulation.

GDXJ

The company has lost almost 83% since its $55 high two years ago.

After 10.1% Return In 2020, Mohnish Pabrai Changes Strategy [2020 Letter]

Mohnish PabraiMohnish Pabrai's flagship hedge fund, the Pabrai Investment Fund II, returned 29.6% in the second half of 2020. Following this performance, the fund returned 10.1% net for the year, underperforming the S&P 500 but outperforming the Dow Jones Industrial Average, which returned just 9.7%. According to a copy of the investment manager's year-end letter to Read More


GDXJ MED

Two months of sideways price movement on declining volume. Note large volume mid-April as gold sold off $200 in two days. Note second new low on lower volume in mid-May. Now, see third new low on similar volume.

GDXJ 2 day

gdxj sm

After the opening hour, see the extremely tight trading range. Who is selling vs. who is buying.  Forced selling/capitulation into strong hands?

Time will tell, but I smell the beginning of the end of this rout. When there is no hope that is the time to step in. I am using the company as a proxy for small mining companies.  This is the time to look for exhausted selling. The market will go up not because there are new buyers but because the sellers are exhausted/already having panicked.

Via : csinvesting.org

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