The gold miners have bounced from the depths of Monday morning's despair, however, the real test comes over the next few days. When a market gets ridiculously oversold a 2-3 day bounce is usually in the cards. It's the size of the bounce and how quickly the particular market goes back down that makes the difference.

$22.50-$23.00 in the GDX is a big area of potential resistance and $1240-$1250 in gold is the same. Gold futures have bounced as high as $1233 so far and we will have to see if they make a run at the $1240s today or tomorrow. Depending upon how exactly the scenario unfolds there could be a tactical shorting opportunity in the miners and as always we will be ready to pull the trigger if it sets up.

Notice how well the Fibonacci levels line up at two key levels of support/resistance in gold ($1210 and $1250....and yes, i'm rounding off):

From my perch I have never seen sentiment sour so quickly on the precious metals sector. We have literally seen the consensus view shift from "you want to own gold" to "you can't own gold" in a matter of a week. Sentiment is close to reaching an extreme the likes of which we haven't seen since at least January of this year, however, i'm not sure we have reached the absolute bottom in terms of depressed sentiment on the gold sector. Perhaps a couple more weeks of tax loss selling will give way to a Santa Claus rally?....

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