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September 21, 2014

TrendBands Fund Adds GDX

The Market Vectors Gold Miners ETF (GDX) was added to my hypothetical TrendBands Fund this week... on the short side. As Members know, I have been short gold itself since late July. Until early September, the mining sector was resisting gold's slide, offering a point of hope for relentless gold bulls. That point slipped away over the last three weeks, and GDX is now quite clearly in a statistical downtrend.

So we have a pile of bearish signals here. The TrendBand violation defines a downtrend. The bearish break of a typically bullish pattern offers the likelihood of a strong move lower. And gold is unfolding a bearish weekly cycle which still needs several weeks to reach its timing band.

In fact, I have discussed how gold is beginning to convey that crash feeling. After resetting its daily cycle count in the near future, I expect a final leg lower that could drag the yellow metal to a major pivot near $1000. If so, we could see GDX trade in the low teens as long-term holdouts finally capitulate.

 

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