Gold Miners / GDX / NUGT (3x long ) Update

Yesterday I started a partial GDX Nov. $25 Call position  , I decided to do so because of a head fake move below a bearish flag that was meant to draw in the shorts as well as a very large, fast developing 10 min positive divergence that suggested a large chunk of accumulation had taken place quickly, it was "partial" because of the size of the head fake move and set up, I'd gladly add to the GDX long or even a NUGT long position if the circumstances allow for a high probability entry.

GDX (Gold-miners ETF)

 We have the F_O_M_C "Knee Jerk " move that I ALWAYS warn of, "Most of the time with F_E_D related events, the initial knee-jerk move is the wrong move and often quickly faded within a few hours to a few days", this is a perfect example and its market wide.

The bear flag tells technical traders that price is consolidating or taking a break, but to expect price to continue on a new leg lower that is approximately the same size as the preceding trend before the flag, so this is incentive for shorts to enter on price confirmation which is a break of the flag's lower trend-line support, this is also where I wanted to enter on a suspected head fake move.

This is GDX just a few minutes ago on a 1 min chart, a slight consolidation, maybe pullback.

This is the set up yesterday for the GDX call position started, first a break below the flag which drew in the shorts, but look at the positive 3C divergence at that EXACT area.

When you go short, you are literally "selling" the shares you went short so the accumulation signal means someone on the institutional side was buying those shares or supply that were being sold short. The importance of a head fake move and using technical analysis against technical traders was that the shorts would enter on price confirmation which creates more volume or supply for institutional money to accumulate as they need supply.

 The 10 min GDX chart as mentioned above with a very strong, very fast developing divergence, that was the only head fake move and thus the only high probability entry with low risk and good timing, if it had been larger, I'd have entered a larger position and still might.

NUGT (3x long Gold miners ETF)

 This is just a cornucopia of great candlestick reversal patterns.

A and B) are the concept of strength and the next day, "Follow Through". 

B & C) together form a bearish reversal called "Dark Cloud Cover" although the second candle could have closed lower in to the first candle's body.

D) is a 2-candle bullish reversal pattern called, "Harami bottom" or Japanese call it "Mother with baby" and this one can be bullish or bearish depending on the preceding trend.

E) is a 3 candle formation with a Doji reversal candle  in the middle, the 3rd candle is the bearish Confirmation via a Bearish Engulfing candle.

F) is the bearish engulfing candle that is a reversal itself, but added with the previous Doji Reversal, it just made the reversal that much stronger.

G) is another Dark Cloud Cover,  which came on a lack of follow through after the F_O_M_C knee jerk higher.

1) is the same as "G"
2)  is a head fake move below support with a bullish "Star" reversal 
3) is just meant to show the increased volume in the area, this is all supply Wall St. needs because their positions are much larger than anything we can imagine, they NEED that supply that's available and breaking support is a great way to produce it whether it be longs selling or shorts selling short, it's all supply and it's cheap supply. THIS IS EXACTLY WHY I SAY, "DON'T GET LOST IN THE LINES" AND "ABOVE ALL, PRICE IS DECEIVING"

On that day of the break it probably didn't feel good to be a long in this asset, but the story wasn't finished, you were just seeing the start of a bigger picture this is why I trust 3C to keep me from panicking if it's showing accumulation on that first break, wait a bit longer and a much more bullish picture emerges. This is also why I say that I ALWAYS "TRY" to make all decisions based on objective DATA, not emotions, not fear.

 NUGT 15 min, all the same concepts, the F_E_D knee jerk and fade of the move, a break below support, if you look close at volume on the break of support, it increases as price moves further below support, this is multiple levels of stops being hit, but it is also the "Snow ball effect",  which is essentially the weakest longs are going to sell first, as price moves lower, the slightly stronger hands are going to sell and price moves down further, then the strongest hands will sell; if this snow-ball effect is followed through its conclusion on a larger basis, this is how a capitulation day is formed, that's when all hands from weak to strong all sell at once as they can't take it any more.

The "Snow-ball effect" is an essential part of understanding "How, When, Where and Why" when it comes to head fake moves.

 Like GDX, NUGT's mid term 10-min chart saw VERY strong, sudden accumulation in a huge leading positive divergence, this is confirmation between the two different assets and although price is correlated, there's nothing that says volume will be correlated and 3C depends in large part on volume so that's why there's confirmation between highly correlated (price) assets.


Gold Futures

 This is a 30 min chart, there's accumulation just before the F_O_M_C move, leading negative distribution in to it and a recent positive divergence.

The 60 min Silver Futures are showing something very similar.

For now, Gold miners are well correlated to gold, gold is fairly well correlated to silver, this all bodes well for GDX/NUGT long.

If I see another entry area, I WILL post it. It looks like we may get a chance...

 I showed a negative divergence forming at the top of this post in the earliest capture, it was only 1 min. Now we have intraday negatives like this 2 min out to the 3 min chart.

Not to worry though, the 5 min is holding fine and the 10 min looks as good as ever, so if anything, this should be an opportunity to add to the GDX call position, open a new one or NUGT long.