GDX / NUGT Update and P/L

As you know NUGT (3x leveraged long Gold miners) is one of 3 PM positions, I felt the short term leveraged long (NUGT) was in a better place to be taking profits than to ride out short term pullbacks which seem more likely.

At the fill of $6.31 for a NUGT long equity position, the P/L came to +11.1% which isn't bad for a quick ETF trade.

This is why I feel that the short term probabilities are on the side of a pullback and thus took gains here. There are no "sure things" in the market ever. 

For example, we had an amazingly strong $USD positive divergence and the main correlation with risk in the market was the last carry trade standing, the $USD/JPY, that means unlike the historical Legacy Arbitrage correlation between the $USD and risk assets which is historically exactly the opposite, since November 16th 2012 the $USD moving up meant the Yen moving down and this was THE "Risk on" signal for the market.

While the other two carry trades, the AUD/JPY and EUR/JPY took weeks/month to unwind, the $USD/JPY unwound and flipped correlations 180 degrees in one day on June 19th. 

The bottom line is we had a VERY strong signal telling us the market was headed in one direction as the correlation was nearly perfect for 6 months (and increasingly so), then it flipped to its polar opposite in 1 day (It was unusual for the correlation to flip and certainly unusual for it to flip that fast whereas others had taken weeks to slowly flip). The lesson is simply, "There are NO "Sure Things" in the market, just objective evidence and probabilities.

 Looking at the intraday 1 min GDX (Gold Miners) chart above, what does the highest  path or probability of direction look like?

 NUGT is a 3x leveraged version of GDX, but it trades its own volume, has its own supply/demand dynamics and is even managed by a totally different company, yet its intrraday chart is nearly identical to GDX's.

GDX 2 min tells us the divergence wasn't just a paper thin 1 min chart, it migrated to a longer timeframe making the probability of a pullback more than 50/50.

The NUGT 2 min chart loos exactly the same.

 GDX 5 min which is a fairly strong chart beyond intraday obvious;y has a negative bias to it. The NUGT 5 min is almost exact;y the same, the signal sure is.

GDX 10 min suggests that the move to the upside is just getting started, of course that doesn't preclude short term corrections as the charts above hint at.

The NUGT 10 min looks almost identical.

GDX hourly may not be telling us that gold miners are about to shift in to a primary bull market, but it does suggest higher prices well above and beyond the current position.

NUGT 60 min  is almost indistinguishable. There's no special correlation in 3C between these two, it's no different than comparing Financials to AAPL, if there's a correlation this high between the charts it means they are both seeing the same action, that's what we see here.

Short term, I think it's worth taking profits and waiting for a better, lower risk entry. Longer term I think we have pretty significant upside in NUGT and GDX.