Gold Miners Update

Since I've already fielded several emails about the gold miners today I thought I'd just address them in a post.

The basic answer I've given is that despite the nice move in NUGT today and miners in general (GDX), I personally wouldn't be chasing the miners long here and if I had to make a choice right now between DUST (3x short miners) or NUGT (3x long miners), I'd choose DUST, that is if I had to make a choice right now, the caveat being to me the trade looks like it is moving away from the miners, but the signals are not strong enough for me to consider a trade in them right now as they have given very strong signals in the past.

 The 5 day chart of GDX (Gold Miners), long term this isn't a pretty chart, volume looked good early in the uptrend, but since it looks like a large top that has already broken.

 As usual, if I can't short the stock near the highs of the top, I'm generally not interested in chasing the first break as there's almost always a shakeout move (unless it's a swing type trade) that usually offers a better entry.

 We almost always see a head fake move above some important level before a reversal, normally I'd say it would be above the red trendline, but the white trendline could serve equally as well, the reason I have a question mark is because of the normal behavior of moving above the major resistance area and there's a chart or two that seem like this is still a possibility, but I see the trade as having past the point of the easy money.

 Just locally the 1 min chart isn't keeping pace and is negatively divergent with the 6/8 highs.

 The 5 min chart shows a strong negative divergence on what is potentially the head fake move above with the "?" above it, the highs of the 8th and today's higher highs are negatively divergence here too.

 The 15 min chart went from pretty much in line to negative at that same spot that is a suspected head fake move, the reason for the question mark is the relative positive divergence to the right, however keep in mind that even though there's a relative divergence, 3C i lower than it should be for confirmation. If there's to be one more head fake move up above the major resistance, yes money can be made, does it look like a high probability, low risk trade? No.

 The 30 min chart gave a good long signal back in May, but that has deteriorated quite a bit.

 The 60 min chart has given excellent signals both short and long, this chart isn't there yet and that's why I'd personally hold off on going short miners, at the same time as mentioned above, any further upside doesn't look like a low risk/high probability trade, there are thousands of stocks to trade, I see no reason to take a trade that is sub par.

As for the leveraged ETF's, they are giving similar signals, DUST the 3x leveraged short on miners is positive on the 30 min, not quite there on the 60 min though like GDX above is not quite there on the 60 min.

NUGT the 3x leveraged long miners is negative on the 30 min just like GDX and the opposite of DUST, again it's not quite there on the 60 min. So all in all it looks like the gold miners trade is winding down, but I think it's a bit too early to enter  a short there, I think we'll get a better signal before too much longer.