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GLD & GDX Appear Poised to Rally

GLD (gold ETF) looks like it may have put in at least a near-term bottom on yesterday's lows (which also coincided with a backtest of key support on GDX). A break & 60-min close above this minor downtrend line would likely spark a rally up towards the initial target zone & quite possibly beyond.

GLD 60-minute Dec 18th

GLD 60-minute Dec 18th

So far, GDX bounced as expected off the key 13.30ish support level. While one more thrust lower within the wedge is certainly possible, a solid break above the wedge would likely spark a rally up towards the 15.15 area. As such, a new price target, T3 at 15.10 has been added. While yesterday's tag of support or even where GDX is currently trading offered/still offers an objective long entry or add-on to an existing position, I would suggest a DUST short over a NUGT long for swing traders or trend traders that are looking to position for what could morph into a multi-month+ trade, should gold & the mining sector start to show evidence that a more lasting bottom has been put in place (vs. just one more in a long string of very profitable short-term counter-trend trades that we've traded in the miners over the last couple of years).

GDX 60-minute Dec 18th

GDX 60-minute Dec 18th

There's really no way to say with confidence when a lasting bottom in gold & the miners is in place or looks likely to be forming until the charts reflect that. That might be 20% or more off the final lows in GDX & gold but with every new low in this already extended bear market, we are one day closer to a bottom. Hence, I'll keep trading the miners long & short, primarily trading off chart patterns, support & resistance, etc.. based off the intraday charts but when it looks like a long-side trade has the potential to last for more than just a few days, I'll typically opt to short DUST in lieu of a NUGT long in order to have the decay of these highly volatile, 3x leveraged ETFs work for me, instead of against me. As such, DUST will also be added as an Active Short Trade at this time (in addition to the GDX & NUGT longs). However, due to limitations with how each post is assigned both symbol tags and categories, DUST will appear under the Active Long Trade ideas. Essentially it is a net long position anyway, being that a short of a 3x inverse ETF gives you long exposure to that sector.

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Dec 18, 2015 12:08pm|Categories: Completed Trades - Long, Gold & Commodities|Tags: , , , |7 Comments

7 Comments

  1. bluemagic December 18, 2015 8:50 pm at 8:50 pm

    Hi thanks for sharing your ideas and information. I’d also like to share with you about the advice of Martin Armstrong about gold:

    http://www.armstrongeconomics.com/archives/40648: “YOU CANNOT BUY IT NOW. Please wait until 2016.”

    I see DUST has formed a neat descending triangle in the monthly chart, which agrees with Armstrong’s advice. Happy holiday!
    Bluemagic

    https://www.tradingview.com/chart/qYRJF26p/

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  2. rsotc December 18, 2015 11:30 pm at 11:30 pm

    Thanks for sharing Bluemagic. I can still see a decent probability of gold moving about 3-7% lower to a major support zone + key Fib support that I’ve been highlighting on the longer-term (weekly) charts for a while. Just looking for another counter-trend bounce right now although always open to the fact that the bear market is gold is likely to end when very few expect it. Again, thanks for sharing the commentary & FYI, the 2nd link that you posted from tradingview opens to a $INDU (Dow Industrials) chart, not DUST.

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  3. GM December 19, 2015 7:11 am at 7:11 am

    Thanks for these thoughts Randy.
    I’m no charting expert (especially short-term), but this post of mine might be of use in identifying some long-term trend lines that should support prices in the near future:
    http://screwtapefiles.blogspot.co.uk/2015/12/nearly-there.html

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  4. jaycaries December 19, 2015 12:02 pm at 12:02 pm

    Hi Randy, I have been following your blog since few days & found your charts really useful. Can you please tell me the third indicator you are using? (Chart just says the length 13-33). Thanks!

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  5. rsotc December 21, 2015 11:09 am at 11:09 am

    @jaycaries – That is a custom histogram of the 13 & 33-ema pair which I created on the TC2000 charting platform. It gives a quick visual reference of whether the 13ema is trading above (bullish) or below (bearish) the 33-ema and I also find it useful in using divergences on the histogram to help identify likely trend changes in the underlying security. I use different pairs of moving averages on various time frame & securities. Here’ a video that I made a while back showing how to configure these custom histograms: https://www.youtube.com/watch?v=ax6OJ20mmiM . I’ve also been able to replicate them on stockcharts.com. Let me know if you have any questions.

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  6. jaycaries December 23, 2015 11:28 am at 11:28 am

    Thanks Randy, I use TD ThinkorSwim chart, it doesnt allow me to customize MACD like you have shown in the video. Will try out TC2000/stockcharts.

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  7. rsotc December 23, 2015 12:08 pm at 12:08 pm

    @jaycaries– On stockcharts.com, I add a MACD histogram to my chart (just the histogram, not the MACD which shows the two lines). Then I change the signal line (the last of the 3 settings such as the 9 in the common 12,26,9 MACD setting) to zero and change the first two numbers to whatever ema pair that I want to show a histogram on. e.g.- A MACD histogram setting of 13,33,0 will replicate that 13/33ema histogram that I commonly use on my 60-minute charts. Try that on TOS & even better, just remove the 9-ema signal line if they let you but again, setting it to zero will accomplish the same thing. Some charting platforms that I use will not allow me to remove the signal line or set it below a value of 1.

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