The gold stocks have continued to attempt to bottom but as yet have not been able to mount a significant rally. 

On Friday (July6th), the index had an ominous down tick that left an island reversal in place.  Typlical of this bottoming process would be a retest of the recent lows.  That retest may now be imminent.

See chart below of the index and the gold stocks ETF (GDX).

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After a seven-month decline, the gold stocks may have bottomed on a technical turn first suggested by Victor "Trader Vic" Sperandeo.

Trader Vic used to be a frequent guest commentor on the old Financial News Network and has  appeared on CNBC a few times.  His first book "Trader Vic: Methods of Wall Street Master," at the time of its publication, was called by Stocks and Commodies magazine the greatest book ever written about trading.  They may have been right about that.

Anyway, this setup was suggested in his second book, "Trader Vic II - Principles of Professional Speculation".   He called it "The Four-Day Rule."  It applies to all markets but in this case we're talking about the gold stocks as monitored by the Gold Bugs Index (symbol: HUI).  

 The Four-Day Rule

And "The Four-Day Corollary" is illustrated by the red line and arrow in September -- the four or more (five in this case) days in the direction of trend with the first day down signifying the top.

And to my mind, they are both examples of why Trader Vic has been and still is one of the greatest traders and technical market analysts ever.

Four days in a row is a compelling phenomenon at any time in the market as notably evidenced here.  There are only two such sequences on this chart and one marks the top and other marks the bottom (so far).  Once the turn takes place, Vic would put a trend line on the chart and monitor the rally in relation to that line.  I have also added a horizontal line across the high of the fourth day up as a sort of line in the sand for any pullback.

It should be noted that we have not had the sort of pull back or retest of the recent lows or break of the down trend line that would give a clearer indication whether or not this is going to be a major rally or just a bounce in bearish decline.  That, no doubt, will come at some point, but for now it's ride the trend line up until it breaks.