Whether the F_E_D reacts to a hot inflationary trend that is ABOVE their long run mandated standard of 2% (it was only 1% 8 months ago) while real wages are falling, we'll see in a few hours, but gold and miners are reacting.
Typically gold is bought on the EXPECTATION of inflation which may explain the base we've been watching develop in both gold and gold-miners. Additionally, before QE, gold miners tended to lead gold, that was reversed during QE as everyone went straight to gold, however that former trend may be reestablishing itself. All I can say for now is that I'm glad I didn't try to trade around the NUGT long (it wasn't worth it considering how good it looks for a simple probability of a pullback).
Here's where we are now and it does seem the market itself is preparing for inflation even if the F_E_D does not at this meeting (which they may).
GDX (yellow) vs GLD (candlesticks), Gold miners have been outperforming GLD recently, +10.57% for GDX from its recent low vs +2.26% for GLD from its recent low. It appears several pre-Q/E relationships are re-establishing, as I've already said, I think volume which has been neglected to a useless indicator over the last 5 years will be one of the big ones and honestly, traders weren't very good at volume analysis before QE, most new traders of the last 5 years will have no idea how to use volume analysis, one of the most important indicators on a chart (before QE and I suspect after).
The GDX/gold miners chart looks strong, 60 min leading positive, but even looking at a longer timeframe and much bigger base (recall this week's earlier comparison of multiple gold and silver miners, all showing the exact same trend whether averages or stocks)....
NUGT's leading positive divegrence stretches all the way back to what is either a large inverse H&S (white) or a Cup & Handle base (red).
I suspected we'd see a pullback in GDX/NUGT because some intermediate charts were showing negative divergences along the lines of a pullback like this 15 min chart above, I decided to hold the NUGT long, with trends this strong I wasn't going to risk missing the ride for a pullback trade.
However since then, there's been nearly daily repair to the charts...
GDX intraday is nearly perfectly in line, not in a deep leading negative divergence indicating a pullback is imminent.
Look at the sudden improvement on the NUGT 2 min chart as it was negative and then pulled itself back together.
And the 5 min chart is nearly in line, I suspect that these "may" be able to migrate out to the 15 min negative and repair that too, especially if concerns over inflation keep mounting.
This is our custom Moving Average Screen meant to eliminate false crossovers using 3 different indicators, one in the middle window is a custom indicator. On the last pullback to form the handle of a C&P base we saw a sell signal (based on price only), then a few whipsaws on the price moving averages, but no other trade signals until the recent confirmed buy signal.
If you are interested in GDX/NUGT long, I'd wait for a pullback, typically after a buy signal is generated here, the first pullback will be to the yellow 10-day price moving average, subsequent pullbacks tend to be deeper to the blue 22-day.
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