GDX / NUGT SCBO

"SCBO"=Second Chance Buying Opportunity...

On Wednesday 5/28 at the lows, I filled out the NUGT partial Trading Position, Trade Idea: NUGT (Long).

Yesterday NUGT was up at one point over 5% and I had posted GDX / NUGT Update in which I said,

"I don't like chasing ANYTHING, but if we do get some intraday or short term corrections in GDX/NUGT as they are both up 1.72% and 5% respectively so far today, BOTH ARE STILL IN EXCELLENT OVERALL POSITION TO START A NEW POSITION OR TO FILL OUT AN EXISTING ONE, THEY ARE STILL VERY LOW IN THE BASE. That being said, again, I do not want to chase them here, yesterday was the time to pick them up."

The point over and over again of course was do not chase price, let it come to you and today is a perfect example of why we don't chase price. 

GLD/gold was hit , it has seen numerous pre-market dumps in the lower volume of non-regular hours, but today's was right in the regular session.

 So far the GLD dump is showing a nice positive divegrence, I'd like to see this recover today, but it does need some lateral price movement before I'd expect to see any recovery.

With GLD having such a tight correlation with GDX/NUGT (Gold Miners), this brought GDX/NUGT down this morning as well. This is the kind of pullback/correction I was talking about yesterday.

The 28th is when we filled out the NUGT long at the lows for NUGT, Trade Idea: NUGT (Long) and this is the same area I'd want to enter if you are interested, but maybe missed the first go-around.

Although NUGT is holding up well, I'd prefer to see more lateral movement like we saw on the 28th (white), there's a probability of a move slightly below the 28ths lows which makes for an even better entry and you can decide where to put a stop loss just below, whether a 7% rule (which I would only use with GDX, NUGT can move that much in the course of a normal correction) or some form of the 2% rule. I just would be very careful to avoid whole numbers and not to make the initial stop too tight, you can do that by decreasing position size and trading that for a larger stop, as the trade starts working in your favor, you can tighten the stop and add to the position on pullbacks as we are VERY low in the base and really an entry +10% north of here would still be an excellent entry point.

I'll continue to update GDX/NUGT/GLD as the charts develop and as the process intraday develops, if it looks like it will reverse today or in to Monday, then an entry today would make sense.

Again, this is why we don't chase.