The GDX:SPY ratio measures mining stocks' performance against the general stock market. The important news is that we have just seen a spike high in volume.
The sell signal is generally given when we see a single spike high in the volume levels, meaning that the volume in gold and silver mining stocks has been much bigger than that seen in the general stock market. The quality of this signal is enhanced if the ratio encounters a resistance level as well. Such is the case here, as the 200-day moving average and the early March highs are both in play.
While this is not an overly important resistance level, it has stopped rallies in the past. With the recent spike high volume and these resistance levels in play, the outlook is not much promising in the near-term.
This is a big deal because this ratio has been quite reliable in the past in terms of giving a buy/sell signal for gold and silver mining stocks. Based on its previous performance we believe that it should not be ignored.
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