GDX / NUGT Update

Wednesday's afternoon divergence was small in scope (about 3 -4 hours max.) so as I said yesterday, the reversal process would be proportionate and probably not very long. We started seeing very positive intraday charts yesterday afternoon and this morning a gap up. If you had to have a position there, NUGT would have been the way I'd go unless you already had a GDX Call from before when we had an advantageous entry.

Here's yesterday's update as GDX and NUGT started going positive again and DUST negative as well as today's action with a gap up. When looking at the shorter term trades in GDX and NUGT I have to give them a positive bias because the intermediate term charts that are typically in the Swing range of a week to a few weeks are positive so until or unless those charts start falling apart, GDX gets "some" benefit of the doubt in analysis, which is still objective because the intermediate chart is there.

Action thus far in most assets still looks "guarded", however it's very difficult to say that with ANY certainty being this is the normal action for an op-ex Friday. We do however have a few hints, perhaps some targets that may help you with trade management and/or add-to or new positions, which in this case, I'd prefer to stick with a leveraged ETF like NUGT long, options have more leverage, nut the premium is pretty high right now.

 GDX 15 min leading positive divergence and the question I've had and asked here a few times, "Are we dealing with two distinct cycles, the first already completing the 4 stages or are the two individual cycles really one large one? The numbers, 1, 2, 3, and 4 correspond to the 4 stages of a cycle, accumulation, mark-up, distribution and decline.

A 1 min chart of GDX shows the Wednesday afternoon distribution and yesterday's accumulation and a current (as of this capture) "in line" status or confirmation.

DUST 1 min shows the mirror opposite as it should for confirmation.

If this is 1 large cycle, then we have some measured move targets that are usually exceeded. Note from left to right, the first bottom was put in by a dual candlestick pattern, a "Tweezer bottom" in yellow. The left portion of the "W" would have been a head fake bear flag that was expected to break to the downside, giving it decent upside momentum as it failed to break lower. The right side of the "W" is defined by today's bull flag which is expected to break to the upside. I suggested with some other assets that Wall St. may actually be using retail to help push assets higher, if that's the case, the bull flag should NOT fail and should move higher. The measured move for the next leg of the GDX bull flag would be about $.90 to $1.00 out of the flag or around ...

$26.30 and as you see, since I started this post, the 3 min chart is already leading positive so it looks like this is the most probable outcome, although I'm not of VERY high confidence, I will hold open GDX calls and long GM positions.

With the bull flag, watch for either a gap fill attempt and/or a small head fake below the flag.