GDX / NUGT Update

NUGT is becoming a more pressing matter, GDX calls were closed yesterday, perfect timing because today instead of being worth +30%, they'd likely be a third of that if we were lucky.

NUGT was left open because even though it is a 3x leveraged long (GDX), it's also an equity/ETF so Theta is not a concern, it was added to the initial GDX position for that very reason, the calls to capture initial momentum and the equity long to capture the longer term trend that I find options are often poorly suited to using them in a straight buy/sell manner.

Gold isn't the issue now, but since its current correlation is TAPER OFF rather than RISK OFF as it was last week, any move lower in the market is likely to take the PM complex lower and if you recall, both GLD and SLV in my view are each in counter trend bounces and they should head lower to form a larger base before they are a real upside threat.

GDX moves awfully tightly correlated to gold, thus our NUGT long which was at something like +30% earlier is now +20%, I don't want to lose that. So here are the charts and the plan moving forward.

3C CONCEPT... I have said this numerous times, now I'll show you as I often do when I remember. 

Wherever a 3C divergence first starts (and in this case GDX/NUGT were accumulated in to lower prices as most accumulation occurs), it doesn't matter that the averaged position would be lower than the upper prices where the divergence first started, price almost always far exceeds the level where the 3c divergence FIRST started.

 The left side of the arrow is not part of the divergence, it's the relative point to compare, the right side of the arrow is where the divergence first started and I drew a white trendline around the price area as well as highlighted the dates as you see a leading 15 min divergence, price has already exceeded the highest price the accumulators paid so the position for them is green no matter what.

This chart is also the reason I picked up NUGT, although I don't expect a month long uptrend, I expected more than just the initial pop and NUGT is meant to collect on that.

GDX 1 min looks a lot like ES 1 min or SPY 1 min doesn't it. so it appears GDX/NUGT will break higher from today's bull flag, this is where things get sticky and details important.

 The stronger 5 min chart is already showing significant damage, it won't take long for the 15 min to start to see damage.

I expect price (green) to shoot above the bull flag and the only way this move makes sense is to surpass yesterday's highs (in all assets/market averages), otherwise we don't have a breakout and we don't have buyers which is the reason for the move.

If 3C confirms the move (yellow line), then I'd hold NUGT, but if 3C doesn't confirm (red line), I'd sell NUGT in to the higher prices that should be coming and do it quickly.