Over the past few weeks we have seen a sudden straight up move in many stocks that suddenly reversed on Friday.
A lot of the big cap momentum leaders just dumped.
And this morning they are poised to gap down more.
I did a video Sunday showing what happened with NVDA and what it means for other stocks like it now:
http://wallstreetwindow.com/node/13404
Now I must admit I did not predict the Friday drop in these stocks.
But I do not know anyone on CNBC who warned that it was going to come either.
Just the opposite as all they have been saying is buy!
And so this move has taken everyone by surprise.
But this week I believe something else could happen that will take everyone by surprise too and that is gold.
The GDX/GLD ratio is the relative strength ratio that compares the performance of gold stocks to gold.
When gold stocks outperform gold you have a big bull run in both and when the ratio trends down it means you are not in a sustainable rally.
But last February when the ratio turned up it marked the start of a massive 100%+ rally in mining stocks.
Gold then peaked that summer and corrected and so everyone has stopped paying attention and the few gold bugs out there have given up again.
But take a look at the GDX/GLD ratio now.
This ratio is now in a position in which it can breakout of this resistance triangle pattern by the end of this week.
If it does a huge rally in gold and mining stocks will begin.
And when it does it will take everyone by surprise, because everyone is asleep on gold right now.
If you have been on the sidelines with gold and mining stocks if this ratio turns up this week you will have to act quickly IMHO.
So keep your eyes on it.
And then you will not be surprised.
It is by planning ahead that plans are executed in the markets.
Here is my take on the tech stock drop and what is next for the stock market now:
http://wallstreetwindow.com/node/13404