![\"\"](\"https:\/\/assets.jeffclarktrader.com\/ee-assets\/channels\/articles\/mm\/201911-MM\/20191127-MM-01.png\")
<\/p>\nThe past four months have been tough for gold stock traders.<\/p>\n
It didn’t matter if you were bullish or bearish on the sector. Gold stocks have frustrated both sides. Rallies have been short-lived, with each bounce topping out at a lower level than the previous peak. And, none of the declines have caused the sort of selling pressure that usually creates a good buying opportunity for the gold stocks.<\/p>\n
So, the sidelines have been the best place to be for the past few months… <\/p>\n
And, at least for the near future, the sidelines still look like the right spot.<\/p>\n
Look at this updated chart of the VanEck Vectors Gold Miners Fund (GDX)…<\/p>\n
<\/p>\n
GDX peaked in early September. It then fell all the way down near $26 per share. Ever since then, each rally has peaked at a lower level, and each decline has tested the same $26 level as support<\/a>. This action has created a “descending triangle” pattern on the chart. It’s a bearish pattern that usually breaks to the downside.<\/p>\n There is room inside the pattern for GDX to bounce a bit in the very short term. But, unless GDX can break the pattern of lower highs and close above $27.70 or so, the gold sector has lower to go.<\/p>\n Notice how all of the various moving averages (the squiggly lines on the chart) are in a bearish formation – with the 9-day exponential moving average (EMA)<\/a> trading below the 20-day EMA, and the 20-day EMA below the 50-day moving average (MA)<\/a>. This condition is going to make it hard for the GDX to mount a sustainable rally. And, if GDX makes another lower high and then turns back down to test the $26 support level again, the odds are high that support will fail this time.<\/p>\n GDX has tested the $26 level five times in the past three months. Each test weakens the support level a bit. It’s like when a person jumps up and down on a frozen lake. Each jump cracks the ice just a bit, until the ice finally breaks.<\/p>\n I suspect the next trip down to $26 will break the ice for GDX. At that point, GDX should quickly drop towards the next support level near $25. And, that move should create the sort of exhaustive, oversold conditions that often mark the bottom of a gold stock correction.<\/p>\n For now… GDX will probably pop a bit higher in the days ahead. But, it will be a short-lived bounce. The gold sector still has lower to go. And, most traders should stay on the sidelines.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n Today in the mailbag, subscribers disagree with Jeff’s “insidious thoughts”…<\/p>\n At times a brilliant man, Jeff Clark is carried away by impractical thoughts.<\/p>\n Examples are:<\/p>\n 1. His backing on Bitcoin<\/a>. He has to save readers, not unintentionally push them into a deep river. He has to curb these insidious thoughts.<\/p>\n – Rakesh<\/strong><\/p>\n<\/blockquote>\n Jeff, I’m thinking you are a perma-bear. I can see you thought 3020 on the SPX was the turnaround. Guess what? You got it so wrong.<\/p>\n![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
<\/p>\nReader Mailbag<\/strong><\/h2>\n
\n
2. His prediction that the market would crash<\/a> on a Monday in October 2019. <\/p>\n\n