As for yesterday's decisions to close out some GLD Dec. calls on the large momentum move, I think it was the right call, the January GLD calls that are doing better were left alone, I think that too was the right call.
The NUGT sale and DUST buy for a short term trade in the trading portfolio I think was also the right call
if that kind of trading suites you, if you have the time, risk management and risk tolerance, otherwise, staying the course with NUGT is perfectly acceptable, but you still are likely yo face risk in a pullback that may be just as uncomfortable, it's just part of the market.
The Trading portfolio which I like to keep at 6 positions (currently 7) which is an experiment that uses no options, only equities/ETFs was started on 11/29 and is now up 12.9% and that's with pretty conservative trades, but it's way too early to call it a success, however I could retire the portfolio right now and have outperformed 90+% of the hedge funds for the year in just 9 days and using NO LEVERAGE (margin other than what's required for a short position).
In any case, I view DUST as probably the riskiest position right now just because it's counter to the long term probabilities and is just a gap fill position. That also means I have very little tolerance for the trade going against me, if probabilities are exceptionally high and on the side of the position that's one thing, but when they are not, you have to know when to fold them and either walk away or run.
Here's what GLD and GDX based ETFs look like.
GLD's late day improvement yesterday on a 1 min chart as mentioned last night,
notice I didn't take any counter trend or GLD shorts for a pullback, I didn't see the 3C probabilities there.
GLD's very short term still has a negative divegrence and the short term probability of a gap fill which is probably a 5% probability alone, however the closer we move to the edge the more volatility, chaos and just seemingly random trade (which will only be revealed when looking back as not being random at all) will present itself to knock out as many traders as possible no matter bullish or bearish.
NUGT's short term pullback probabilities, for now I'm sticking with this and the DUST long, but look forward to re-entering a NUGT trading position. If you are holding GDX or NUGT as a core position long, then I see nothing wrong with rising a pullback, you may even wish to add to the position once we get to something close to a gap fill.
This is about as high as the DUST probabilities go and that's not much more than a gap fill, but I didn't want to wait for draw down in NUGT when I can use the dry powder to make something in DUST and return to NUGT.
The chart below is something I wish I could create an indicator for, but it's just something you have to get use to seeing over time.
The reversal process
The upside reversals are always tighter than the tops or downside reversals, compare 1 and 1 (bottom and top, or 2/2. The upside reversal from 2 is about as tight as they get unless it's a parabolic reversal which is fairly rare and needs a parabolic move first. The point is,
a reversal is not an event, it doesn't just happen, it has proportionality to it and 3C can help us determine what the likely size is, but seeing the preceding trend and the reversal process gives you a good idea, such as #3, that's the right size bottom for a gap fill, but not much more. I encourage you to look at charts in this manner, get use to their character and understand a reversal isn't just an instant thing, it's a process.
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