Monday's gap down in Market Vectors Gold Miners ETF ($GDX) produced a new 52-week low for the year. Gold stocks and spot gold have been incredibly weak in 2013, and we expect the trend in $GDX to continue, with at least one more selloff to test prior lows of 2008 (around $18).



We don't like to establish a short selling entry immediately after the price action breaks below an obvious support level. Over the years, we have found these type of entries produce quick reversals that "run the shorts out of town".

For us, it is much safer to go short after a bounce into resistance, especially when the bounce produces some sort of bearish reversal candle for entry. In the case of $GDX, a short-term bounce into resistance of the declining 20-day or 50-day moving average would be ideal.

The only drawback to a "short the bounce" entry occurs when the price action is extremely weak and does not bounce. This occasionally happens and there isn't much we can do about it except stick to our game plan and wait for our type of setup to develop.

After a strong breakout from a long-term base, PowerShares Dynamic Food & Beverage ETF ($PBJ) is once again in base mode, as seen on the chart below:



$PBJ has formed a tight range above the rising 10-week MA over the past few weeks. If possible, a pullback to support of the rising 10-day moving average would be an ideal entry on weakness. However, the longer this consolidation takes to break out, the more out of sync it may be with the current rally:



As mentioned yesterday, money continues to flow into financials, and this appears to be the only sector with ETFs and stocks breaking out to new highs in numbers (with the exception of the biotech sector).

We continue to see relative strength stocks underperform the broad market, which is not a positive indicator for overall market health. $QIHU, $YELP, $YY, $SIRO, $NOAH, $P, $SCTY, $SPWR, $FB, and $TSLA are still in pullback mode and have yet to stabilize.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.