As expected, the herd has chased gold's move lower. Poor market sentiment right now leads me to wonder, if everyone has gotten out of gold, who's left to sell?

According to the CFTC's CoT data, managed money short positions have outweighed long positions for four weeks now, amounting to a near-record short position. Traditionally, it's the opposite; gold sits in a net long position, meaning managed money longs outnumber shorts. We've only seen this kind of pattern twice, and both times, gold has rallied.

The first time was in July 2015. Gold bottomed within two weeks, and rallied 11 percent. The second such time was in November 2015, and gold bottomed within three weeks before ultimately rallying 32 percent.

This signals that gold is creating a bottom near the psychological $1,200 mark. Gold was trading at $1,221.50 per ounce on Monday.