How Relative Strength Revealed Today’s Big Move in GDX

 

Using Relative Strength to Track Money Flow: A Clear Example From Today’s Market Action

Today offered a textbook lesson in how relative strength can reveal where money is truly flowing, often before the broader market shows its hand. When you compare a strong stock or ETF to a benchmark like the SPY, you can spot early signs of accumulation, rotation, or weakness. GDX (the gold miners ETF) delivered a perfect real-time example of this on the 3-minute chart.

At the open, marked as Point A, both SPY and GDX rallied together. This is normal, broad markets lift most assets in the first moments of trading. But what happened afterward is where the edge appears. As the morning progressed, the momentum in SPY faded. By Point B, SPY pushed down to fresh intraday lows, giving the impression of a weak market and suggesting that risk-off pressure might continue.

But look closely at GDX during that exact moment. Instead of following SPY lower, GDX held firm and printed a significantly higher low compared to Point A. This is the essence of relative strength divergence: the market shows weakness, yet a specific asset refuses to break down. When this occurs, it’s often because buyers are quietly stepping in accumulating shares even as the broader market struggles.

This higher low was your first major clue that GDX was not just stable, it was under accumulation. Money was flowing into gold stocks while the overall market weakened. That kind of divergence is one of the most powerful tells a trader can use.

Shortly after forming that higher low, GDX pushed up through resistance. Once that level broke, the ETF continued to rally steadily into the early afternoon. Traders who recognized the divergence early had a clean setup and a strong trend to ride. Relative strength not only identified where buyers were focused, but also helped anticipate the direction of the next move.

The story becomes even more compelling when you zoom out. Looking at the daily chart, you’ll see that this intraday relative strength move wasn’t just noise, it actually triggered a breakout on the higher timeframe. That means the strength we saw on the 3-minute chart was part of a broader shift in demand for gold stocks.

This is exactly why relative strength is so valuable. It helps you see where money is flowing before the breakout becomes obvious to the crowd. Today’s action in GDX was a clean, powerful example of how watching divergences can guide you directly to the strongest opportunities in the market.

For more relative strength insights and recent market posts, visit the homepage at The Relative Strength Trader