Gold and Gold Miners

I have short positions in both gold DZZ (2x leveraged Gold short) long and Gold Miners via DUST (3x leveraged short Gold miners), as you probably noticed today both GLD/gold and GDX/gold miners popped to the upside putting the DZZ long position at a -4% loss (which is a partial position that has room to add if I found a better entry that still had strong 3C signals) and the DUST long is at a -3.13% loss, both very acceptable for 2 and 3x leveraged positions for me.

However I want to keep an eye on these positions as I still don't know what the correlation between gold and the market is going to be as it has changed twice and this could be a thrid 180 degree change, but 1 day does not make a trend.

Here's what I have on both GDX (Gold Miners) and the related DUST (3x short Gold Miners) position as well as GLD (Gold) and the related DZZ (2x short gold) position.

 I'VE TALKED AT LENGTH ABOUT HOW I FEEL ABOUT GOLD LONG TERM, I LIKE IT A LOT, BUT I THINK IT IS STILL WITHIN THE BORDERS OF A LONG TERM BASE.

The bull flag of the last several days is very apparent, technical traders would see that if they were trading GLD, the pop today is an Evening Star, a bearish reversal star as there has been no ground gained between the gap open and the current price, it's a sort of loss of momentum and that is why the candle formation is considered a bearish reversal candle. Also note the increasing volume which in my experience makes these reversal candles about 2x more likely to work.

This would be an ideal head fake set up, just because of the very obvious bull flag which traders expect to break to the upside, leaving them holding the bag works as a bull trap head fake for downside price momentum.

The long term 60 min chart shows the large base I mentioned above and its range, there has been significant accumulation recently and we see that toward the end of a base, but my view is that GLD is going to pullback to the bottom of the base and maybe even run stops on a head fake move before making a breakout to stage 2 mark up so I'm short to sub-intermediate bearish and intermediate term to long term bullish gold.

 The 30 min GLD chart shows the negative divegrence that I think is part of pulling GLD back to the lower end of it's longer term base.

The 15 min GLD chart (as well as others) all confirm the same signals, in any case, I can't see GLD moving much further north with 15 and 30 min negative divergences, it has to in my view, at least pullback to build new strength, I just happen to look at the big picture and think that this happens at the bottom of the range near $114.

 The 5 min chart as far as timing shows the recent bull flag as being in a negative divegrence and today's gap up did not see any 5 min confirmation so it doesn't appear to be that strong, this makes the head fake scenario more likely.

The 3 min chart shows a positive divegrence Friday afternoon, however at 3 min vs 15 and 30 min negatives it didn't appear to be much of a threat, you can see it moved to confirmation of the gap, this is where we look for any new divegrences forming intraday.

 Both the 1 and 2 min (migration) are negative intraday, I'd think that the 3 min will be next to see an intraday negative, if that happens I may add to the DZZ long or a GLD short/put as this would be excellent positioning, but I want to see higher intraday probabilities first.

As for GDX (Gold Miners), they are somewhat similar to Gold overall.

The long term 2 hour chart also shows a base with recent increasing positive divergences, but still within the range of the overall base area.

 Like GLD, the 30 min chart is calling for a substantial pullback, again I suspect toward the bottom of the range which would be around $20.40 and then there may even be a head fake move in the area consisting of a run on stops below the $20.00 area as support is so long and well defined and $20 is a whole number where stops would likely be accumulated.

The 3 min GDX chart didn't have the same Friday afternoon positive, but it does have a negative in to the gap up as you can see above.


DZZ 2X SHORT GOLD

 DZZ's 60 min chart is leading positive after a negative divegrence and downtrend (opposite GLD) , the positive is impressive, I can't see today's gap down nullifying such a strong positive, although it is not a huge divergence in duration which makes me think it is along the lines of a swing trade plus, or sub-intermediate uptrend as GLD pulls back to it's lower support.

 The 15 min chart confirms not only the negative and the downtrend, but the leading positive divegrence.

 Intraday on a 2 min chart there's no confirmation of the gap down.

For these reasons I chose to hold DZZ long and may even add to it if I see charts that just can't be ignored, the larger picture looks very solid, the short term charts from this point are more about timing for me than anything else.

DUST 3X SHORT GOLD MINERS...

 Like DZZ, DUST has an impressive 30 min cycle from distribution to downtrend confirmation to a leading positive divegrence and there's confirmation between all 4 assets as they are all correlated (GLD, GDX, DZZ and DUST).

The 5 min DUST chart looks like it is ready to make its move, this is why I closed the former NUGT long and replaced it with DUST, again no damage at all from today's gap down.

The intraday chart actually looks pretty good as it is seeing a new leading positive high on the gap down, I'll be watching this, I'm not sure I have room to add, but I suspect that both DZZ and DUST will be ready at the same time, for now I'll hold both longs open.