Check Out The Chart: Signs Of Life For This Mining ETF

One theme that has been beaten like a dead horse this year has been the slack performance of gold and silver mining stocks and ETFs relative to the underlying metals. Even before the infamous margin hikes on silver that led to a plunge in spot silver prices, silver miners and the Global X Silver Miners ETF

hadn't delivered returns worth writing home about in 2011. While the S&P 500 is up over 6% year-to-date, SIL is down 8.6% while the Market Vectors Gold Miners ETF

is down 7.44%. The Market Vectors Junior Gold Miners ETF

, today's “Check Out The Chart” subject, is even worse, having plunged 9.2% year-to-date. In fact, GDXJ's June slide was so violent that the ETF actually made a new low for 2011 in the $32 area before finding support and bouncing higher. Since late June, the ETF has been in rally mode and even with a small loss on Friday (as of this writing), GDXJ is still up nearly 7.5% in the past five trading days. Now, it might just be fair to say the ETF has an interesting chart. Not necessarily really strong, but certainly not as weak as was seen in June. GDXJ is doing battle with some resistance at the 200-day moving average at $36.55 and a move above that area gives the ETF plenty of real estate to run back to $42-43 area, the upper end of which represents the 2011 high. GDXJ's stochastics show the ETF may a be a tad overbought in the near-term, but the relative strength indicator is far from signaling overbought conditions, perhaps indicating that as investors embrace riskier assets such as small-caps again, GDXJ is poised to benefit. Of course, it is dangerous to assume that gold miners are simply overdue to rally in unison with spot prices for the yellow metal. That argument could have been made several months ago and would have proven quite unprofitable. That said, gold miners have suffered some nasty technical blows this year, indicating the worst may be behind the group. With seasonal trends favoring higher gold prices right now, mining stocks and ETFs, GDXJ included, may be poised to rally in the back half of 2011. If nothing else, GDXJ has a favorable risk/reward scenario here. Check out the chart.