NUGT Updated Stops

I'm still very torn on whether to trade around NUGT as it has been a pretty spectacular winner (but after yesterday's performance, profit taking is inevitable) and all of the longer term trend indications are very strong for a primary uptrend (Bull market in miners/Gold). This is where holding on to the past can skew your decision making process, specifically I'm talking about calling a top in AAPL or AAPL topping as it made new highs, of course AAPL longs back then wouldn't hear of anything like that, you were clearly a whacko if you didn't believe AAPL was going to $1000 or $2000. I had great short positioning and saw a smaller positive divergence for a bounce which is pretty common in a choppy top (that's why tops and bottoms are the hardest to trade, it's stage 2 mark-up and stage 4 decline where the easy money is made as long as you know when to avoid the counter trend moves, especially in stage 4 which can destroy great gains-look at the first CT rally after the initial 1929 crash, 5 months and +50%).

In any case, I covered the short looking to re-open at higher prices, then Third Point's 13F came out and AAPL was no longer on Dan Loeb's top 5 holdings, that crushed AAPL immediately as all hedge funds tried to fit out the small exit at the same time resulting in a -45% move over 8 months, nearly half of AAPL's value and that positioning was lost due to overtrading or trying to trade around corrections too much, that is the kind of event that stays with you subconsciously often, this is why I support the use of trading journals, to uncover what drives us unconsciously to make bad decisions based on past experiences that may have nothing to do with the current environment other than to remind you in some way.

I'll put out an update on the PM's and GDX/NUGT in a little bit as more data accrues, but for now, these are the Trend Channel stops that I prefer to use on a closing basis. The Trend Channel was the first custom indicator I won an award for.

 The 60 min Trend Channel has held this entire move thus far (on a closing basis with only 1 stop out on a 60 min basis, the channel widening yesterday got me a little concerned, although in the bigger picture, wringing out the excesses with a pullback is typically healthy for the asset, plus we get to see if it is accumulated on the pullback which I can virtually guarantee for GDX/NUGT. This also allows those who may want a position in the asset, but who correctly have not chased it, to find an opportunity to get in at better prices and much reduced risk.

The 60 min stop, which I prefer to use on a closing basis is $41.50

 The good news for NUGT is that the Trend Channel has made a new turn to the upside and now can be used on a daily basis, the stronger the trend, the wider we can make the channel (for instance, after stage 2 breakout to mark-up, we will likely be able to use a 2-day Trend Channel, holding the bulk of mark-up gains.

The stop here which is always on a closing basis is $35.05 as of now, but will continue to lock in gains for the next several hours.

Also good news as we have been tracking a GDX/NUGT long position for a while... My X-Over Custom M.A. Screen just gave a confirmed long signal, we were only a day away from it yesterday.

The 10 and 22-day price moving averages have given a long, the problem with using these alone is they often whipsaw and give a lot of false signals, so I added a custom indicator in the middle window (yellow) and a 22-day / bar moving average, which just crossed to a long today and the third indication is Wilder's RSI 14 period above 50, which gives us all 3 signals long, a confirmed long.

Typically after a new signal (long or short) is given, the first pullback is to the yellow 10-day moving average, subsequent pullbacks tend to be deeper to the blue 22-day moving average, so by the time the 10-day moves up, if in fact this is the pullback, it should be around the gap area which the market has been relentless about filling, however this too may change as it was not this way before QE (2009), that gap would be a break-away gap and likely unfilled for quite a long time.

I'll update these soon and let you know what I decide to do, maybe a hedge of some sort.