Iamgold Says "I am Your Tell"

Further softness in the broad market, especially with QQQ down more than 0.75% as I write this, on top of the small caps in IWM operating back under their 200-day moving average, is keeping bulls at bay early on this morning.

It may only take a large buy program of two in order to reignite the buying pressure we saw earlier this month. However, as of now we have some typical summer doldrums type of action. FDX and MU are some prominent earnings reports tonight in what is otherwise a lighter week of earnings. Both of those names, FDX in transports and MU in chips, are capable of moving their respective sectors tomorrow, depending on the reaction to their reports this evening. 

Naturally, gold and her derivative miners (as well as silver, to a lesser degree) is a hot topic these days given the surge in the yellow metal and miners we have seen this month. I suspect today is the first day of potentially the first pause in what has been an explosive rally up to this point. 

If this gold move truly has legs, then dips will not be so generous and slow as to allow patient longs to leisurely enter. Instead, we may see fast shakeouts which simply sprint higher immediately, or perhaps 1-3 days of tight ranges with little actual price giveback before the rally resumes. 

In terms of looking for clues, we could look at some standouts like GFI KL and other best in class charts. However, I view a smaller cap miner like IAG, below on its daily chart, as offering up defined goalposts. 

IAG found support right where it needed to, at its prior 2015 lows (light blue line) and rallied with the sector in recent weeks. But IAG rallied directly into its 200-day moving average (yellow line) and is pausing here today. We can plainly see the buyers or size, or potential accumulation by funds, taking place on the bottom pane of the chart, too, which adds credence to the bull case. 

But the true test should be how IAG's price action contends with the 200-day in the coming days and weeks. It is unlikely a name like IAG can fail at its 200-day and yet the gold rally chugs on. If we see IAG negotiate this big test easily, however, then I suspect gold bugs will finally get that new bull market they have been seeking for a good while now, perfectly under the cover of darkness as many still focus on crypto instead.