Uless there are really strong signals in GDX and GLD like the head fake at the bottom with huge accumulation that started the last major run up or the strong pullback signals that we got, confirming the GDX breakout was indeed a false breakout or what technical traders see as a "Failed breakout";
the bottom line is the day to day shorter term moves take a LOT of analysis using not only multiple timeframes, but multiple assets. For instance I need to look at 6 different timeframes for each of the following to put together a composite picture, GDX, NUGT, DUST, GDXJ, JNUG, JDST and GLD, that's 7 assets times 6 timeframes for each so it's a little time intensive, but I think I have a handle on what to expect, where the next trade will be and maybe where we can expect the larger pullback buy to occur.
I try to put the best chart for each timeframe that most represents the composite picture of each asset, but there are quite a few.
This is GDXJ (Junior Gold Miners) 60 min 3C chart with a negative divegrence at the breakout area and a very large positive divegrence (where we initially bought NUGT) at the head fake move/base.
This is something VERY important to consider in understanding the markets. I've often considered writing a book to address the "Random Walk Theory" vs. the "efficient Market Theory" that traders have argued about over decades, my book would debunk both. The market is neither random nor is it efficient as we are seeing in prices while the economy is in shambles.
I often say, "Wall Street doesn't do anything without a reason" and they are very forward thinking with their inside information.
In any other market over the last 400 years, the breakout in GDX would have been valid until things started to change with the internet and advancement of Technical Analysis, around 2000 everything started changing.
While we have our tools to give us signals, one of the best uses of them has been understanding how Wall St. works. HOW COULD WE HAVE PREDICTED IN ADVANCE THAT GDX WOULD NOT ONLY BREAKOUT, BUT THAT IT WOULD BE A FAILED BREAKOUT?
Don't get me wrong, I love GDX/NUGT and can't wait to buy them again at the right time, but this is the way in which you must start to come to understand Wall Street, nothing is random, nothing is efficient, almost everything is controlled to some degree.
The 60 min chart above is a good example of the breakout seeing distribution as new buyers buy the breakout, they create the demand Wall St. needs to sell their supply for a pullback, obviously not all of their supply as they spent a year accumulating it, but enough to load up again at lower prices.
JNUG is Junior Gold miners 3x long, this is a 15 min chart, it also shows an excellent signal of the breakout seeing distribution and a head fake move just before the reversal in the yellow box,
this is a concept you can count on seeing nearly 80% of the time, it is what I'm waiting for in IWM right now to possibly add calls.
GDX (Gold Miners) 5 min saw a larger volume event at the lows yesterday, often a short term reversal signal just like our Dominant Price/Volume relationship's,
Close Down/Volume Up, tends to lead to a short term bounce the next day.
I suspect GDX will break out above the base neckline again and possibly create another head fake move or bull trap.
DUST is the 3x leveraged Short GDX ETF, the opposite so this 5 min chart with a leading negative divergence from the mirror opposite of yesterday's GDX lows, DUST's intraday highs, is confirmation of the GDX chart above,
which means expect DUSt to pullback. Ironically, this may set up the next DUST trade I said I'd entertain if there's a set-up, even though it's not the main trade, but a piggy back to the main trade, NUGT long on a pullback.
GDXJ (Junior Gold Miners) 2 min shows the accumulation again of yesterday's lows, confirming all charts above (and below).
This is the GDX 60 min chart with the important base neckline, I suspect a head fake/false breakout there,
but just looking at the size of the reversal process, I DO NOT THINK THERE IS ANYTHING APPROACHING A REASONABLY SIZED REVERSAL PROCESS TO CREATE A REAL BREAKOUT, IT'S TOO SMALL, NOT ENOUGH TIME FOR ACCUMULATION.
As I reminded you yesterday, my Trend Channel which is the first custom indicator I won an award for, later copied or ironically coded exactly the same (3 years later) by Price Headley, this moves according to recent asset behavior unlike envelope channels at presets or the wild swings of Bollinger Bands, when it detects a significant change in character it produces stops or buy signals, however,
this is one of the best ways I have found to stay in the trade based on objective data and not opinion as to how far is far enough.
However as I reminded yesterday as well, the initial stop which was triggered in red, often does not give a clean "U" shaped/rounding reversal, there's often volatility that is not worth sticking around for after the main trend has been stopped out. I suspect we are going to see some of that typical volatility that proceeds a signal in the channel like the recent stop from the previous uptrend.
I looked at GLD as gold has a strong correlation to gold miners as shown yesterday, GLD also stopped out of the recent uptrend and has significant gaps below that will likely be filled.
However there's a gap above that looks as if it could be filled first.
This is an excellent chart for GLD showing the distribution/downside reversal/pullback and the short term accumulation yesterday as well as the upside gap that can be filled. GDX would likely move in tandem with GLD after GLD just had 2 of the worst days in a long time on the downside.
I suspect GDX will target the gap below, but the market is never "reasonable", traders would expect a gap fill and for that reason I suspect the accumulation and reversal process for GDX/NUGT (where I want to buy them again), will take place just below the gap as a head fake move as many traders consider the gap as support so broken gap support would create retail stops and short selling that provides Wall St. with the supply needed to accumulate in size.
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