GDXJ Update

Yesterday I entered a SHORT TERM leveraged position in GDXJ using $21.63 May Calls , the trade was based on GDX analysis, but as it developed, GDXJ looked to be the stronger of the two, it has worked out so far with GDXJ up +.82 (over 1% earlier today) and GDX at -.20 (just slightly over break even earlier).

On a quick note, I have a couple of emails about limit orders and areas where to place a limit order. I like the idea of limit orders in that you are waiting for the trade to come to you, theoretically. In reality, I almost never use them, I'd rather get filled at market and have the position than try to pick the exact spot in which you may miss the trade opportunity. That's just been my experience; limit orders don't have to filled, market orders do. I try to keep it as simple as possible and I have found limit orders complicate decent trades if you don't get the limit correct.

 GDXJ on a weekly chart, this is why I'm not looking at this as a long term long position, there's too much overhead resistance.

 On a daily chart, the break below important support almost always creates a volatility snap-back and shakeout, I don't like to short initial breaks for this very reason. Note yesterday's hammer-seen pretty much market wide, this is a good short term reversal indication.

 This is what I'm hoping for in a target, the descending triangle is a bearish continuation pattern, the fact it broke would have pulled shorts in to the trade, a move above the apex of the triangle will have them doubting the validity of the triangle as a failed pattern, so I'm looking for a target above $23-the higher they can take it, the more emotional distress it will cause shorts, the more shorts who cover, the higher it will move.

 The 1 min chart with recent positive divergences looks like it had been prepping for a move up.

 A closer look shows an intraday pullback, there's no negative divergence at the reversal this morning, that is good. It seems the pullback is nothing more then some FX arbitrage as the Euro weakened slightly and GDXJ has been pretty much in line with the Euro. This means the $USD strengthened slightly, which puts some arbitrage pressure on the position, but I don't see this as a problem right now, it may be a decent SCBO (Second Chance Buying Opportunity).

 The 2 min chart is in line with price, which is good.

The 5 min remains leading positive, suggesting GDXJ is just getting underway. Expect some consolidation near the $22.40 resistance level.