The last time I had done fairly intensive analysis of the 3 assets which have a fairly high correlation right now my conclusion was that I'd hold NUGT (the same with a GDX or gold/GLD long) as a core/trend position.
However that wouldn't stop me from making counter trend and short term trades from a couple to days to swing.
I also felt that the long term underlying trend in gold suggests that the downtrend was coming to an end and we'd see at least a
sub-intermediate to intermediate uptrend and if gold pulled back enough to widen the footprint of the base, then I'd upgrade that to an Intermediate to a new primary uptrend in gold.
Understand the most common reason for buying gold (and right now we are seeing very strong suggestive activity of such, more so than price represents) is inflation EXPECTATIONS, so if you are trying to figure out what the F_E_D will do, when, etc. that's an important pice of information. QE drove gold higher for a long time, that was based on inflation expectations with a weaker $USD as the F_E_D's printing press ran 24/7. There can be other reasons however than simply QE, as a matter of fact I do believe this would be the first and only time gold was bought because of QE based inflationary pressures which did mount and were very obvious in commodities and companies' margins between input costs and sales.
Not too much has changed in the assessment for both, but there is a decent chance for some misleading activity and a decent chance for some trades if you are pretty aggressive.
GLD 2-day 3C chart
A) Accumulation at 2009 lows
B) An inline or 3C/Price trend confirmation
C) Where we first suspected a top due to intraday charts
D) At this point we already expected an intermediate to primary downtrend on heavy distribution
E) The current accumulation in GLD.
On a shorter timeframe of 30 min you see the strong accumulation phase and a couple of areas of gap fills we expected, 1 is filled, the larger one is the one I suspect we are heading to.
There is a chance GLD widens it's base with a deeper pullback to the second white area forming a "W" or double bottom, often there's a slightly lower low, but that's something we'll deal with as it comes.
If GLD does make this pullback, I'd upgrade the future uptrend 1 notch to Intermediate to a full primary bull market. Not all pullbacks and declines in price are as bearish as they appear.
This is the daily chart of Gold Futures, this is a significant positive divegrence confirming the GLD charts.
Again, I think you can imagine how easy it would be for a downturn to create a larger base in gold futures from here.
Gold futures 30 min showing in line price/trend confirmation at green and distribution on a smaller scale in red, but more than enough for a pullback.
Gold 5 min futures, this is positive and it looks like gold could chop around as I suspect the market is likely to do,
I'd expect a wide chop to attract longs/shorts, but chop nonetheless so far with what we have.
*I mention this because ultimately it's noise, but it could either scare you out of a position, give you false confidence over a position or prove to be useful for tactical and short term trades.
This is the $USDX 1 min chart w/ a negative divegrence, a pullback here would likely send risk assets (gold, stocks, oil) higher.
This is a 5 min chart which is more reliable, the same signal, this would be the first swing.
Ultimately though the $USDX 4 hour chart has a strong positive and that's a negative for risk assets so short term looks choppy and risk assets up and probably down in a wide range, but the more important trend looks like it agrees with most every other chart, risk assets down on a stronger $USD.
GDX-Gold Miners
This is a 5-day chart, my view based on market behavior and signals in place is this large H&S type top is REAL and will eventually see the downside it's measuring implications predict,
THAT WOULD ULTIMATELY PUT GDX IN THE AREA OF MID-TEENS OVER A LONG PERIOD.
A) the Top,
B)The break where shorts jump in
C) A consolidation that is actually a base
D) A breakout higher
E) A large head fake move that clears all the shorts and sets up the real leg down.
GDX daily positive at the base described at
"C".
The accumulation and first leg, but also a smaller negative suggesting the pullback we've been expecting.
NUGT 3x long GDX/Gold miners as confirmation
The same longer term base/accumulation
(4 hr. chart.)
The current negative/pullback signal on a 15 min, but compare the accumulation period to the distribution and it too spells pullback that should be accumulated as it moves lower and make for an excellent , low risk, high probability long position that
comes to you.
Very short term, 2 min intraday negative yesterday and going positive today as part of the chop (which I may change with new signals, but I'd still classify whatever we call it as trend noise),
This is not only good confirmation of gold and GDX, but all in all, good confirmation of near term market trade as well.
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