On Friday at 12 PM EST I'm going to do a live video update about the stock market with David Skarica. To join go here.

$BPGDM - 3.33 - down 50% today

I have never seen it this low!



As I understand things, this is NOT a be-all-end-all contrarian indicator. $BPGDM simply measures the number of miners that are trading below their respective 200-day SMA's. That would be, well, about 95% of them. I confess that I do not know which mining universe this index samples.

Look. We all know that the miners are being hacked and smacked into oblivion, right now, especially with the gold bullion sentiment readings (no matter HOW you subjectively or objectively measure them) remaining low. Still, over the last two days, we got nice dead cat bounces (or, depending how you see things, incipient forays into much higher prices down the road). My only feel on this is, stay with quality. AUY and GG are currently my picks for the cream of the mining stocks. I know, I know -- GG still hasn't shocked the price charts, but they reported another great quarter, and I would say,"steady as she goes," concerning future prospects. In other words, if you are a gold bull, buy GG down here. They won't ring a bell, when the markets finally wake up to the fact that this is a top-tier sector producer.

My overall point? $BPGDM is a good contrarian indicator, but not a great one. It is a composite index measured against an abstract criterion -- an abstract sampling of the gold miner universe that simply states what is obvious when you pull up price charts for the miners we all know and follow. However, it IS an accurate picture of the negative sentiment that continues to bedevil the gold mining sector. Hey. Buy low, sell high. "Low" comes with negative news. You all know where I stand, and that would be 80% in, but still fussy and selective about individual companies.

Repeat. $BPGDM is accurately reflecting the relatively low prices and bad press the gold sector is currently receiving. So what? Buy low, sell high. Now is low, high comes later. Pick an indicator. The gold sector is now saying "buy me," if you are a contrarian. If you are not (baaaa baaaa, baaaa, -- see Mike's most excellent recent post on, NOT the "Silence of the Lambs," but on the blattiness of the goats) then continue to live in your own private speculation/investment Hell. As I have said many times, here, believe Rick Rule: in this sector, "you are either a contrarian or a victim." Be a contrarian. If you have to take your lumps, then at LEAST you will be taking them at lower entry points than the goats who become attentive ONLY at higher prices.

Shalom, and good luck.

Take a look at Dec of '08 on the weekly. It was "0". And right now the full stochastic, both red and black lines, have flat lined at "0". Now that is something I never seen before.

The cool part is not that it is happening, but we are alive and there to see it. Kind of like red coming up on roulette 22 times.

Whenever my OBOS indicators and sometimes the trend one too, PPO, are waaaaaaay over sold, that marks a significent low with a good leg to the upside to follow. Right now, they are all low!

This beggs the question, if this is not the time to be 100% in, then when?

Good life

Daily and weeklies are screaming buy. Nice RSI on the weekly!


* Join and receive the Two Fold Formula guide to picking stocks and combine tested fundamental valuation metrics with technical analysis.

*Align yourself with the big trends of the stock market and be alerted when these trends change.

*Receive free updates when we see an investment opportunity in an emerging sector before the crowd gets in.