Quick GLD / GDX Pullback Re-cap

You are probably well aware that I really like GLD longer term and as the F_E_D exits accommodative policy and certain areas of the market seem to return back to normal correlations like gold miners' leading correlation ahead of gold, I really like GDX (Gold Miners) or the leveraged NUGT. We have been waiting for a pullback in both as they have a fairly tight correlation, but it's worth remembering not only why I like them longer term (apparently being bought as an inflationary expectations hedge), but why we expected a pullback (we had exited our long NUGT position on pullback expectations to protect +40 and +50% gains) and why I would REALLY like to re-enter GDX/NUGT on a pullback.

This is the GDX (green) Gold (red) correlation, GDX leads slightly. For an overall long term trending long asset I prefer miners, but as an inflationary hedge, I prefer physical gold. In any case, they move together pretty well, both found support yesterday , GLD at its 100-day moving average and GDX at it's breakout level(stage 2 or the stage 1 base's neckline).

Several months ago there were large pre-market gold dumps, I suspect to drive prices down so they could be accumulated. I have to wonder if today's gold futures dump was to get the pullback rolling as both had found short term support and may have lingered in the area for a while, the reason for closing DUST long yesterday, but that's just a piggy back trade, the real trade is GDX/NUGt long on a pullback in which 3C should show us good accumulation of both assets giving us a low price, low risk entry with high probability confirmation so long as 3C shows accumulation of the pullback which I believe is probably a 90% probability based on the longer term charts as a lot of work has already been done in forming large bases.

 GLD found support yesterday at the 100-day m.a. , the futures dump sent GLD below that short term support.

GLD's bigger picture 60 min chart shows strong accumulation, note the head fake move that ran stops and allowed them to pick up shares on the cheap and in size as stops were hit, there's a strong leading positive divegrence at the head fake which we see at least 80% of the time right before a reversal making it an excellent timing marker and entry area.

 Short term GLD pullback negative divergences on a 2 min chart and as I said, it looks like some initial accumulation although small scale, it may just be similar to a controlled burn.

 The larger GLD pullback signal we have been tracking on a 30 min chart with a negative divegrence, the 60 in chart still trumps this one so the multiple timeframe analysis suggests a pullback in GLD that is accumulated, when the intermediate and short term charts go positive and gaps are filled, we'll likely have a strong long entry position for a longer term trending trade.

Most of our concepts are fractal in nature, so again, note the head fake move just before a downside reversal in the yellow box as it runs above clear resistance causing longs to buy the breakout, providing demand to sell in to which is what you'd want to do as smart money knowing a pullback is coming so you can pick up shares at a lower level.

GDX

 GDX/Gold miners had just broken out of a long term stage 1 base (inverse H&S), but immediately it was suspect not only because of pullback signals, but the volume was way off for a breakout from such a base. However the breakout serves as a head fake move allowing smart money to sell in to demand of the breakout buyers (chasers) which creates pullback/downside momentum as they are caught in a bull trap and their eventual selling, most with stops just below the trendline, increases downside momentum creating a self-fullfilling pullback.

Yesterday GDX found short term support right at the base's breakout trendline.

 GDX long term 4 hour 3C chart showing the large positive divergences as the Inverse H&S base which is over a year long continues to develop. Again, note the head fake stop run at the yellow arrow just before the breakout, I believe this is where we entered NUGT calls as well as aded to the long equity position.

The shorter term 15 min chart shows a negative divegrence at the breakout area and a likely pullback which is what I've wanted to see to re-enter GDX/NUGT positions at lower prices/less risk.