GLD and GDX Follow up

Tuesday I started new, short duration, leveraged (call option) positions in GLD and GDX (gold miners). For risk management purposes, I split the risk for both positions as if they were one single position just to have a little diversification in case GLD acts more like a "Taper-Off" trade as per my earlier analysis.

I warned last week that I expected a pullback in Gold/GLD/GDX/NUGT , but...

"Not too much has changed in the assessment for both, but there is a decent chance for some misleading activity and a decent chance for some trades if you are pretty aggressive."

We have seen a pullback in all of these assets as you can see below in gold futures ever since the F_O_M_C policy statement.

As you can see gold has pulled back since the F_O_M_C which is a "Taper-On" or "QE-Off" expression in this asset, but this pullback in gold was also something that was expected even before the F_O_M_C.

When I said there was a chance for "Misleading activity", but also a chance for some trades for more aggressive traders, it was exactly this kind of a counter trend (trend being the pullback) bounce that I suspected we'd see and that may be "misleading" if traders saw the bounce up during the pullback and automatically assumed that the gold pullback was over.

As of yesterday I did not see enough accumulation or a wide enough base to make this counter trend trade worthwhile...

"I do believe this will likely see an upside, shorter term move, I'm not very interested in trying to trade it as I believe the larger trend that should continue to unfold is the larger, most probable and safest trend."

As of today, the short term (small) base seen above in white at the far right of the gold futures chart started to look a little more worthy of a short duration, aggressive long play and that's why 
I decided to enter 1/2 GLD and 1/2 GDX.

Here are the charts including NUGT which I also thought was a possible way to play a short duration bounce in gold and gold miners; as well as DUST which is used only for trend analysis and confirmation.

15 min Gold Futures are also showing a positive divegrence like the 30 min which I think is mature enough to sustain a bounce to the upside, I decided to use the leverage of options because I believe the duration of the trade will be short, thus the use of either options or leveraged ETFs.

GLD (Gold ETF)

 The 60 min GLD chart shows a negative divergence as the most prominent divergence suggesting the primary trend for this timeframe is a pullback, this is why I expect GLD/gold to ultimately make a larger pullback even though it looks likely we will see a short duration counter trend (the trend being the pullback) bounce. 

*This is why I said we might see activity (bounce) that may be misleading suggesting the pullback is complete when I doubt very much that the pullback is complete even though I'm putting high probabilities on a short term bounce.

GDX (Gold Miners)...GDX has had a fairly tight correlation with GLD recently so it's highly probable that they move in similar fashion, although the relative performance may be different, thus my reason for splitting the position between both the metal and the miners.

 GDX 30 min chart shows the accumulation that sent GDX higher and the prominent most recent underlying trend being that of a negative divegrence or a pullback much like gold/GLD.

 The 15 min GDX chart shows the pullback signal and a recent, smaller positive divegrence that is leading positive suggesting a bounce which is exactly what I warned we might see as "Misleading" if one were to assume that the bounce were the end of the larger pullback signal, thus the bounce I expect to be shorter duration and as such it is a trade for more aggressive traders.

GDX 10 min showing a decent relative positive divergence.

The 5 min GDX chart is leading positive suggesting the bounce probability in the VERY near term is high, however I suspect the probabilities will ultimately see the bounce fail and the pullback continue in to accumulation or what I'd call a "Constructive Pullback" or a healthy pullback for the larger continued uptrend.

The 2 min chart is leading positive in a strong manner suggesting a bounce in GDX is imminent.

NUGT, (3x leveraged long gold miners or GDX)...

 The 15 min chart should look similar to GDX and similar to GLD. Here we see a positive divegrence sending NUGT higher, confirmation of the move higher until a negative divegrence sets in suggesting a pullback which has started and a leading positive divegrence very near term suggesting a bounce within the pullback trend, this is the trade I'm looking to take advantage of for now and its short duration is why I prefer to use the leverage of options, although a 3x leveraged long ETF like NUGT should work well for those who prefer an equity trade rather than an options trade.

 The 10 min NUGT chart shows the same themes so we have good confirmation between multiple timeframe analysis as well as confirmation of GDX and GLD.

 The 5 min NUGT chart shows the larger pullback negative divegrence and the near term leading positive suggesting a short duration bounce, thus I prefer leverage as I suspect this position will be short in duration and the leverage makes the position worthwhile.

The 2 min chart is good for timing, it shows the negative for the larger pullback trend and a leading positive for the bounce trend, it now has a foot-print or base of 2-days making it a more plausible bounce with higher probabilities.

DUST (3x leveraged short gold miners or GDX). This should have the opposite signal seen in GDX, NUGT and to some extent, GLD as well.

 The 30 min DUST chart shows the most recent larger trend to be an upside move, although a pullback here (bounce in GDX/NUGT) looks probable, the higher probability is for a continued move higher in DUST and a continued pullback in GDX and NUGT after a short duration bounce.

The 10 min chart shows the accumulation for the bounce (pullback in GLD/GDX/NUGT)

The 5 min chart is leading negative which is the opposite of the NUGT leading positive signal, thus DUST is confirming the GDX/NUGT signals.

The short term 2 min DUST chart also suggests the pullback (short duration) in DUST is likely imminent, thus a bounce in GDX/NUGT as expected and GLD.

The 1 min chart goes from upside confirmation, I suspect this trend will ultimately continue (pullback in GDX/NUGT and GLD), but the short term suggests a pullback in DUST confirming the NUGT/GDX and GLD short term bounce signals.

This looks good for GLD/GDX/NUGT long for a short duration, after that we can look at a DUST long and GDX/GLD short for a continued pullback until GLD/GDX/NUGT have built a larger base and can support a larger upside move.