GLD and GDX have pretty good correlation, directionally SLV is pretty close as well, although it still has the feel of manipulation such as we have seen led by Blythe Masters ever since JPM took over part of Lehman in 2008 and inherited a huge silver short which they defended for years, JPM was even brought up on charges of Silver manipulation, but beat the case. I just say this because unless I see something change significantly, of the 3 assets I'd prefer GDX/NUGT long first, then GLD/gold and last SLV. Since I don't ever want that much correlation to an industry group, any combination of positions would be treated as 1 position for risk management purposes (i.e.-long NUGT (3x long Gold Miners) and long GLD (gold ETF), rather than have these represent 2 individual positions in the portfolio, for risk management purposes the positions sizes would reflect adding both positions together to get the average risk position size of a single position.
We have been following a year long base in GDX (gold miners) which seems to be reverting to the pre-F_E_D easy money policies since 2008 of gold miners leading gold, after the F_E_D "accommodative policy" that correlation was flipped on its head and gold rallied leaving miners in the dust, that seems to be changing.
We have NOT had good signals in GLD or GDX; these are great assets for confirmation as there are so many combinations from GDX to the leveraged long/short ETFs to Junior Gold miners and its long/short leveraged ETFs, GLD/gold futures since they move so similar and even SLV to an extent,
but we haven't had good signals in a while and the last trade we had in the group was our NUGT long that did +40% & +50% (long NUGT equity only). Since there just have not been good signals and I'm thankful for that as 3C seems to have been forecasting the price action which is to say there virtually has been none.
GDX's large year+ inverse H&S base. I have had several theories about what's going on here, the first and strongest was we'd see a head fake move just above GDX's neckline (red) which would fail sending GDX on a pullback that would likely be accumulated offering us a new NUGT long position for a real breakout.
Since this didn't happen, I started wondering if the F_E_D's recently more hawkish tone was creating a perception among investors in the space that inflation was the F_E_D's #q fear and they'd go to great lengths (rate hikes) to kill it (along with the market). Gold is typically bought on "
Inflation expectations". Thus the new, more hawkish tone may have given the original accumulators reason to start unwinding their long position which would take some time considering how big the base is.
Either way, the 3C signals have been near impossible to get anything from, the last time we saw that our trade ideas went down by 90% as the market averages offered few signals after the February rally and good thing as the SPX turned in to a chop-fest which is not useful for trading, it's an easy way to lose a lot of money fast whether long or short.
This is the last time we had such horrible signals in advance and looking back it was a good thing.
Since our last long NUGT position on a head fake below a descending triangle and the closure of the position for up to a +50% gain, there hasn't been any trend worth trading so it seems the lack of 3C signals has kept us out of trouble,
sometimes it's easier to keep your chips than it is to try to win them back.
Looking at all of the assets, while still not a VERY clear set of signals, I have a new theory which won't cost us anything and we won't enter a trade unless it is confirmed (although I have a small DUST position that I'll leave open for now until I see whether this is on track).
I'll use Gold futures as it seems to be easiest to see there, remember the shorter term charts are going to reflect near term trade while the longer term charts reflect the highest probability end game.
Intraday futures look like they'll see some downside soon (1 min)...
The 15 min chart shows a small accumulation area that should have driven gold futures higher, but like the IWM, distribution set in.
I suspect the near term trade/trend is down in GLD/Gold and GDX (probably silver too).
The 60 min chart is still very strong and reflecting a high probability upside resolution for gold futures meaning any near term pullback/correction has a high probability of showing 3C accumulation in to the correction which is hat we'd want to see before entering a Gold or GDX/NUGT long.
The 4 hour gold futures is an even stronger timeframe and higher probabilities and it shows the same so any pullback would very likely be a positive divegrence and thus a decent long entry.
Judging by some of the shorter term signals among the various confirmation assets, I suspect the pullback may not be as deep as initially expected and that makes sense being a large deal of the consolidation has probably taken place in the lateral trend.
GLD's 15 min chart showing the initial accumulation and the consolidation (red) at the lateral area of the trend, the overall signal recently looks strong even though I suspect a short term (smaller ) pullback.
GLD's daily base also suggests a resolution to the upside as highest big picture probabilities.
GDX's near term 2 min chart is leading negative suggesting a pullback, but it's not a huge divegrence so I suspect the pullback won't be as big as the initial one we expected.
GDX 3 min is similar.
And GDX 15 min shows a leading positive divegrence suggesting any short term pullback is likely accumulated and thus a good long entry.
GDXJ (Junior Miners) 3 min also suggest a near term pullback...
However at 30 mins the probabilities are in favor of higher prices bigger picture meaning any pullback is likely constructive and a buy area.
DUST is the 3x inverse/bear GDX ETF, its short term signals like this3 min suggest a short term bounce confirming the short term charts above (pullback)
The same on the 5 min DUST chart
However the long term probabilities 4-hour) suggest DUST continues lower and GDX/NUGT/Gold higher.
Junior miners DUST (JDST) show the same.
I'm setting alerts for a closer pullback and will look for confirmation, hopefully this leads to a new NUGT long that has some upside trend, something we haven't seen since we exited our last trade.
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