Gold Miners Still Not Pretty

by Guy Lerner, The Tech­ni­cal Take
I last looked at the tech­ni­cal pic­ture for the Mar­ket Vec­tors Gold Min­ers ETF (sym­bol: GDX) on March 22, 2012.  At that time, prices were near $50, and I was con­cerned that the GDX would roll out of its trend chan­nel and would pro­ceed lower in a water­fall type decline.  This sce­nario appears to be happening.
Fig­ure 1 is a weekly chart of the GDX.  The pink and black dots are key pivot points, which are the best areas of buy­ing (sup­port) and sell­ing (resis­tance).   As stated in the orig­i­nal arti­cle, a close below 3 key pivot points is “a pretty omi­nous sign regard­less of the asset under con­sid­er­a­tion”.   This was an early warn­ing sign of trou­ble ahead, and this break­down point is iden­ti­fied by the down red arrow as prices closed below the 51.95 sup­port level.  Once the 48.74 sup­port level was taken out (up green arrow), prices were rolling out of the down­ward slop­ing trend chan­nel.  This water fall decline will likely end up at the next level of sup­port, which is at 41.83.  Mov­ing to this level also would be con­sis­tent with price pro­jec­tions based upon the prior top­ping formation.
Fig­ure 1. GDX/ weekly

In sum­mary, GDX is head­ing to the next level of sup­port at 41.83.  I would look for prices to sta­bi­lize at this level.