GDX / NUGT Update

This has been a pretty long set up, but GDX and NUGT have done EVERYTHING we forecasted for the last month plus and yesterday looked like the lows for both, thus the Trade Idea: NUGT (Long) post yesterday.

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.

Here are the charts, there are several concepts to pick up so you may want to come back to the charts later, but the forced head fake move to create supply to accumulate on the cheap and the size of the positions on an institutional level (and what that means for the time it takes to put them together) are all helpful perspectives that will serve you well in any asset class.

 This is the GDX/SPY inverse correlation so the start of an upside move in Gold Miners is not a great sign for the broad market, although Gold has a better inverse correlation and GDX and gold have a very tight correlation, still you can see these two (SPY/GDX) tend to move opposite of each other as of late.

 The descending triangle (bearish consolidation/continuation pattern, even though the preceding trend wasn't really large enough for a triangle this big) was not there by accident, the break below would have stopped out most technical longs and brought in shorts as they expect a break to the downside, this is the head fake move we expected and where the supply from hitting stops and short sellers would provide the large supply institutional money puts in to average positions and allows them to do it on the cheap so their larger orders don't drive price against the position they are putting together.

Volume analysis is still a very subtle art form, but in general, increasing volume often marks tops (churning) and bottoms (capitulation events). The recent volume caught my eye and was part of why I wanted to bring NUGT up to a full position yesterday.

 Note the stops and short sellers as support is first broken and as secondary support is broken.

This 1 min GDX chart shows the actual "steering" negative divergence that caused the second level of support to be broken, it didn't take a lot of commitment of funds to do that, but there was some commitment as you can see the negative divegrence, but the supply it created at lower prices would have been well worth it.

Also note the accumulation of those stopped out/short sale shares.

 The 2 min chart shows the primary triangle support line being taken out, it was stronger support and required a higher level of commitment of funds, as this divergence is on a stronger 2 min chart, still look at the trend of 3C as price moves below the support level where supply is plentiful.


 3 min , the thing that stands out here is the accumulation TREND and how it's strongest UNDER support, that's where there was a lot of supply and cheap supply.

The 5 min chart also makes the trend very clear, accumulation was under the range/support.

 Repair of the 10 min chart, especially as the secondary support was taken out. If you place your orders in advance with your broker, chances are VERY high Wall St. knows exactly where they are, not saying they target individuals, but psychologically we tend to gather at the same areas, in my case I did have a stop taken out on a -5% move down to my stop at the low of the day, followed by a rebound the same day to close nearly 5% up.


 This is the larger 2 hour chart, whether GDX/NUGT is a large Inverse H&S base or not, the trend of underlying trade is very clear.

The other possibility is a Cup & Handle Bottom.

The point being not only the larger 3C trend and that being where the highest probabilities for price resolution lay, but THE FACT THAT GDX AND NUGT ARE STILL VERY LOW IN THE RANGE OIF A BASE, NOT EVEN CLOSE TO STAGE 2 MARK UP SO I WOULDN'T ASSUME YOU MISSED THE BUS IF YOU DIDN'T GET IN YESTERDAY, THERE WILL BE CORRECTIONS. *You may want to set price alerts for corrective moves if you are interested in these positions which I think will lead to at least a Sub-Intermediate to Intermediate up trend, if we are really lucky, a full on bull market in miners (Primary trend).