GDX / NUGT Follow Up

Although Gold has a close correlation with GDX (Gold miners), I'm going to keep GDX and Gold updates separate, but you may want to consider both as far as the bigger picture.

Friday we entered a "Swing-plus" position in NUGT long (3x long gold miners), Trade Idea: (Swing Plus) GDX/NUGT and the charts, GDX / NUGT . I'm also going to leave the longer term GDX/NUGT charts to Friday's update linked above.

We have been expecting a GDX/NUGT pullback since July, the idea was that this would be a constructive pullback that will build strength to try to break out of the year plus base which it just barely broke above on weak 3C charts so we exited NUGT long the very same day it broke out of the base on 7/9, a day with a +7.64% gain (our total gain on the two exits +40 and +50%) and it turns out we were as close as you get to the perfect exit as NUGT didn't do anything for months as we expected a pullback which finally came in September.

I still suspect this is a strong and strengthening pullback that will make a significant move higher, I also believe we got in near Head fake lows. The case for a head fake move is better made in GLD, but their correlations are so close I think it's reasonable here as well and volume tends to agree.

 As mentioned, the longer term charts are linked in Friday's post above, they haven't changed and look good.

This 15 min chart is a pretty serious timeframe and tight around the yellow box is what I suspect is a stop-run/head fake move. The divegrence in the area would make sense if that were the case as well.

The more detailed 5 min GDX shows the same accumulation of a move below support/stop-run which is an excellent timing signal for an upside reversal.

 Note NUGT (3x long GDX) has a 5 min chart that looks exactly the same at the same potential head fake move.

Intraday however, after excellent 3C price/trend confirmation, we have a small negative divegrence. I suspect even though it is likely a head fake move, it is not yet wide enough (same concept as the market) for a base that can sustain a strong move, thus some light distribution and a pullback in to accumulation would make sense.

Here's what I mean...

The base area is not proportionate to the preceding downtrend on a 60 min chart (the pullback), so I wouldn't be surprised to see some lateral price movement in the area, even though it looks good from the 3C charts, the base is what's missing. I intend to hold NUGT long and if I see another opportunity for a low risk/hiigh probability entry, I'll post it.

Remember to keep the GLD update in mind when considering GDX/NUGT and vice versa when considering gold.