A Little Rain is Good, But Not Too Much

The price action in the precious metals and their miners in recent weeks has been very impressive on a standalone basis, let alone within the context of a possible bear market bottom. The rationale for a new bull run in the metals and miners could range from anything to markets revolting, once and for all, against maniacal central banking policies, a fear trade, depressed prices, a hated asset class, old-fashioned intrinsic value in a fiat world, or all of the above. 

But one step at a time is still advisable, given how many false bottoms we have seen along the way since 2011. 

On the GDXJ ETF daily chart, below, the junior gold miners are coming in further today down to their respective 200-day moving average. 

While it is not necessary for bulls to hold here, it sure would be impressive and bode well for further evidence of a potential bottom. The main thing bulls do not want to see here would be the lion's share of recent gains given back, say, with a move below $19 for any meaningful period of time. 

Just as with equities off the March 2009 bottom, we can expect violent moves both ways, assuming this is a true bottoming process---They never make it easy for anyone. 

But a little rain here is good after the sunshine of the last few weeks; we just do not want to see it develop into a full-blown storm.