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NUGT GDX Trade Idea

While NUGT has been an unofficial trade idea since just off the recent highs (posted in the trading room), I now believe that the R/R to short NUGT (preferred) or GDX here at NUGT 99.50 or GDX 24.75 is favorable. While I often highlight how the initial reaction to FOMC meeting announcement or the release of the minutes from the previous meeting are often faded, I think this time around will be different.

Charts, price targets, suggested stops & additional notes will follow. I just wanted to get this short entry out asap as I think the odds for a sharp selloff in the miners is quite elevated right now.

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May 18, 2016 2:15pm|Categories: Completed Trades - Short, Gold & Commodities|Tags: , |4 Comments

4 Comments

  1. pangblood May 18, 2016 2:34 pm at 2:34 pm

    So does that make this an official trade? Also do you see today’s action as the “actual breakdown” from the rising wedge, no more retest wedges or other stuff like that. Also once the preferred target has been reached, will you be looking to go long GDX (via short DUST) if the your expected long term bullish outlook remains intact. Thanks for the quick update Randy!

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    • rsotc May 18, 2016 2:43 pm at 2:43 pm

      -Yes, NUGT / GDX is an official trade with price targets, a suggested stop & more frequent updates to follow.
      -So far, Yes, although the current break below the wedge will only be confirmed should we close well below it today as I’m viewing those GLD & GDX wedges on the daily time frame. I don’t expect a retest or false sell signals but anything is possible.
      -Maybe but most likely, no. I will probably not reverse short to long when I close out my NUGT short as I sometimes do. More likely close out the short & then watch GLD, GDX, & the dollar for a while before deciding if & when to position long.
      -You’re welcome & good luck!

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  2. jupiter May 18, 2016 2:42 pm at 2:42 pm

    Hi,
    Could you please let know why it is better to short NUGT than it is to long DUST?
    Thank you.

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    • rsotc May 18, 2016 2:50 pm at 2:50 pm

      Because 3x leveraged ETFs are best used only for day trades as they suffer from price decay when held for extended periods of time & of all of the 3x leveraged ETFs out there, I know of none other that suffers from decay as much as DUST & NUGT. As this trade could last for several weeks or more, shorting NUGT to let the decay work for your position, instead of against it as would be the case with a DUST long, is preferable IMO. For a more detailed explanation of how the decay from leveraged ETFs works, see the FAQ titled “Is there a disadvantage of holding a leveraged ETF over an extended period of time?” which can be found under the ETF Related Questions tab: http://rightsideofthechart.com/frequently-asked-questions/

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