![](\"https:\/\/www.jeffclarktrader.com\/wp-content\/uploads\/2017\/12\/171222-chart1_yuw264.png\")
<\/p>\n\n\tThe gold sector is doing exactly what it should be doing for this time of year.<\/p>\n
\n\tThe VanEck Vectors Gold Miners Fund (GDX) bottomed last Tuesday – within one day of the FOMC December announcement on interest rates. The stock has quietly rallied 6% since then.<\/p>\n
\n\tThat action has produced a new “buy” signal from the Gold Miners Bullish Percent Index ($BPGDM). This signal often marks the start of an intermediate-term rally phase. So, the gold sector should be headed much higher over the next few weeks.<\/p>\n
\n\tBut it won’t be a “straight up” move. Gold stocks are volatile. So, while the trend may indeed be higher for the next several weeks, there will be downdrafts along the way. Don’t let those downdrafts shake you out.<\/p>\n
\n\tIn fact, traders should be using any short-term weakness as a chance to add exposure to the mining sector.<\/p>\n
\n\tTake a look at this updated chart of GDX…<\/p>\n
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\n\tFirst of all, notice how technical indicators like the MACD<\/a> and the RSI<\/a> are nowhere near overbought levels yet. So, there’s plenty of fuel to power an even stronger rally.<\/p>\n \n\tNext, take a look at the action on the chart right after the previous $BPGDM buy signal in July (circled in blue). GDX rallied above both its 9-day exponential moving average<\/a> (the red line) and its 50-day moving average<\/a> (the blue line). It finally ran into resistance at its upper Bollinger Band<\/a> (the green lines). GDX then pulled back and retested its 50-day MA as support.<\/p>\n \n\tThat was your last chance to buy into the gold sector before it exploded higher over the next month.<\/p>\n \n\tSo, traders should use that action last July as a roadmap for the current $BPGDM buy signal.<\/p>\n \n\tGDX has rallied above its 9-day EMA and 50-day MA. The next resistance is the upper Bollinger Band at about $23. That should mark a short-term top for this phase of the gold stock rally. From there, GDX will likely pull back and retest its 50-day MA at about $22.50 as support.<\/p>\n \n\tTraders should use that pullback – if it happens – as a buying opportunity. That will probably be your last chance to get into the sector before the gold stocks take off.<\/p>\n \n\tSo, here’s the bottom line…<\/p>\n \n\tIf you own gold stocks right here, then hang onto them. They’ll likely be quite a bit higher a few weeks from now.<\/p>\n \n\tIf you don’t own gold stocks, then wait for GDX to pull back towards its 50-day MA, and then jump on board.<\/p>\n \n\tBest regards and good trading,<\/p>\n \n\tJeff Clark<\/p>\n \n\tDid you buy into the gold sector after you read yesterday’s essay<\/a>? Where do you see gold headed in 2018 and beyond?<\/em><\/p>\n\n\t![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
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