GDX / NUGT Update

Yesterday GDX / NUGT put in a nice closing candle, a test of lower prices and that test ended with GDX closing higher, almost forming a bullish "hammer reversal".

I'm still holding NUGT and some GDX $25 calls from last Friday, I'm considering adding some November calls, I'll show you why and what triggers I'm looking for intraday.

 In one sense I'm conflicted on the larger or longer trade theory because I simply don't see the support for it on a longer 60 min chart, a 15 min chart is about as far as the support goes, even though there's a slight positive on a 30 min in the area, so I'm thinking of adding to calls rather than NUGT just in case there isn't the support.

If GDX is correlated with Gold and gold is correlated with risk on, then I don't think GDX has a chance on the longer term trade, but if gold flips back to a flight to safety asset like treasuries did this week, then it's possible, we are still missing the 3C longer term support though.

At the yellow arrow, I'm pointing out a head fake move, look at it, it's the same as what I've been showing you all morning, the concept is the same no matter if it's a bottom or a top or a 2 min chart or 60 min chart, it's just different scaling.

The 15 min chart has support, you can see where we sold the last GDX calls on the F_O_M_C release and sold in to upside momentum for a double digit gain.

The 15 min chart looks stronger now on what I would consider a head fake move, so I'd like to add to GDX in this area, in fact likely soon if a couple of things happen.

Right now Technical traders looking at Gold Miners would see a bearish flag and expect a move down, they would short GDX on confirmation of a break below the flag so my two alerts are for a move below the flag and a move below the recent intraday low (formed this morning). If you want to have confirmation and are more interested in an equity position like NUGT, I'd look for a break below the flag and then go long NUGT on a break above the resistance trendline of the flag, that's where the short squeeze would start.

As far as targets, if we look at the big picture showing a large Inverse H&S bottom, or actually a complex H&S bottom because we have 2 left and right shoulders (these are almost always symmetrical on both sides of the head), then we have a price implied measured move of $40.25, based on... the base. 

This is why I'd go with longer November calls, just in case, but it seems unlikely to get such a move unless correlations with gold or the gold trend changes. I think the most probable outcome with the charts we have now would be a move to $31.25 and above, somewhere above $31.25 would be where I'd expect distribution.

I think the latter possibility is the more likely. My alerts are for a move below $24.90, $24.57 & $24.50