OK, so the point was I closed those two to open up some room, create some dry powder as I felt they were likely dead money for a very short term, but in that very short term the dry powder could be used to make some nice gains rather than just sitting and waiting (which is fine too if that's your trading style, as I said, I think both positions have a lot more upside to go and really haven't even started yet)...
Lets start with Gold and broad expectations...
Back in 2011 we identified what we thought at the time was either a Primary top or Intermediate top in GLD/gold, we were right depending on how you apply Dow theory, but we caught the top.
The red #4 represents stage 4, but the very end. As you can see there;s a gap down on volume which is the increased ROC or volatility we see between stages and in this case it's better known as "Capitulation", but capitulation doesn't mean instant or even near term reversal, markets often drop off a bit more and work on a stage 1 base for a while so I wouldn't go buying falling knives in the name of capitulation.
I've thought for a while that GLD was working on a base of some importance, it wasn't clear early on if it was a counter trend move or something bigger, it looks like something bigger that will likely lead to a primary uptrend in gold/GLD and I have suspected for a couple of months now that we'd visit the lower support area of this base before we get to a primary uptrend, which will make for a very nice long term trending trade when we get there.
First however, I've expected GLD to make a sort of "Counter Trend Rally" to the upside, a sharp rally, an impressive rally and that's what the UGLD and NUGT positions were for. If I feel there's at least a swing trade there I'll usually stay away from options and use an equity position or maybe some leverage like the 2-3x leveraged ETFs. I fully expect GLD to head lower after that CTR is completed.
This is the 2-day 3C chart of GLD, the 2011 top which we had a lot of evidence for on multiple timeframes, the decline and the stage 1 base area (large) that we are in now, you can see 3C confirms all of it.
However on a "Counter-trend " basis as I expect GLD to pullback 1 more time in the base, the 60 min GLD chart is leading positive and tells me that a strong counter trend rally is likely before GLD heads lower to the lower part of that larger base seen above.
This is the reason for the NUGT/UGLD long trade.
On a VERY short term basis the intraday charts which were confirming or inline for the most part yesterday are not confirming the gaps up today, being the market and GLD/GDX tend to have a little bit of an inverse correlation at certain points...
SPY 15 min chart in green, GLD in red, note the inverse correlation at certain bounces/pullbacks... Taking this in to consideration, the intraday charts like the one above this make some sense considering the intraday charts of the market averages.
This 3 min GLD chart was in line, now it's leading negative, it doesn't look like a huge pullback, but no confirmation, a gap, and the rest of what I'm seeing tells me some pullback is likely before the Counter Trend Rally really gets to the meat of the move.
The 5 min charts are what really did it for me, GLD above which had confirmation yesterday has none on the gap up today.
As for the longer 10 min GLD chart, you see the base area and leading positive divegrence so I still think GLD/GDX will make a strong move up and if I didn't need the dry powder immediately I'd probably have no problem holding through a pullback with signals like this.
However even here you can see a current , smaller relative negative divegrence.
GDX
GDX is a bit different than GLD, you can see it already put in a large base and moved to stage 2, it pulled back pretty deep and the 2 hour leading positive divegrence looks like it's going to move up with gold / GLD on the CTR.
This is the reason for the NUGT long position
However, like GLD on a shorter term basis like this intraday 1 min chart, there's no confirmation of this morning's gap up when we had confirmation the day before.
Even at 5 min where we had beautiful 3C/price trend confirmation, there's none now, that tells me in the near term GLD and GDX or UGLD and NUGT are likely to pullback a bit to the base area that is sponsoring the counter trend rally move that we see on 60 min and 2 hour charts.
Even the 10 min GDX chart is not confirming and thus in a negative divegrence,
not huge, not worrisome, but enough to tell me its probably dead money for a few days at least, so why not use it elsewhere considering it was in the TRADING portfolio?
The final straw for me was the confirmation in all of the assets and specifically here at NUGT 5 min negative divergence today with no confirmation, if
there's to be confirmation, DUST should have a 5 min positive divegrence...
And there it is , 5 min positive for DUST.
So I think GLD and GDX likely pullback to about the April lows or thereabouts which should make for an even stronger counter trend rally up,
I do NOT think this move is dying or over, I think there's just some rotation in to different assets and that may be because of a F_E_D leak of the minutes.
I'll be back in NUGT and GLD/UGLD long, I'll just let the market/3C tell me when.
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