Gold question

The following question was posted on the Google VIT group:

[I]Pascal,
in your June 20 comment of the day you wrote:

"I am a believer in buying oversold situations in areas where you have accumulation, and gold miners and gold are under accumulation or at least are showing signs of early accumulation."

But when I looked at GG, SLW, GDX, SVM, RGLD tickers in the USA stocks on the morning of June 20 it didn't seemto me like the LEV was positive for any of them or even increasing much.

And yet it turns out you were right and these stocks rose on the 20th and the 21st.

Please let me know what indicator you were using that led you to say that gold miners were seeing early accumulation.

Thanks,
Dan[/I]

The main indicator was the GDX Robot. One of its component is the GDX MF, which was close to issuing a buy signal last Friday and indeed issued it at the close. You can visit the last GDX Robot comment to see that indeed, there was strong accumulation on the GDX ETF.

When I see accumulation, I would do like you: visit the different stocks that are part of the GDX ETF, starting with ABX, which carries the strongest weight. ABX was under accumulation. GG was slightly under accumulation, but the Canadian equivalent was under heavy accumulation (C.G). We were early, but still, you could see that money was moving in the sector and this was detected by the Robot, which issued a strong buy.

I pointed out at GG, because it had a nice standard TA chart: bouncing off its 200MA.
By the way, the bounce seems to occur on decreasing volume, but we are still early in the day and we will probably have a bounce on strong volume today.

I also attach below visuals on where to click in order to quickly view the EV pattern of all the stocks in one sector.


Pascal

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[QUOTE=Pascal;13866]The following question was posted on the Google VIT group:

[I]Pascal,
in your June 20 comment of the day you wrote:

"I am a believer in buying oversold situations in areas where you have accumulation, and gold miners and gold are under accumulation or at least are showing signs of early accumulation."

But when I looked at GG, SLW, GDX, SVM, RGLD tickers in the USA stocks on the morning of June 20 it didn't seemto me like the LEV was positive for any of them or even increasing much.

And yet it turns out you were right and these stocks rose on the 20th and the 21st.

Please let me know what indicator you were using that led you to say that gold miners were seeing early accumulation.

Thanks,
Dan[/I]

The main indicator was the GDX Robot. One of its component is the GDX MF, which was close to issuing a buy signal last Friday and indeed issued it at the close. You can visit the last GDX Robot comment to see that indeed, there was strong accumulation on the GDX ETF.

When I see accumulation, I would do like you: visit the different stocks that are part of the GDX ETF, starting with ABX, which carries the strongest weight. ABX was under accumulation. GG was slightly under accumulation, but the Canadian equivalent was under heavy accumulation (C.G). We were early, but still, you could see that money was moving in the sector and this was detected by the Robot, which issued a strong buy.

I pointed out at GG, because it had a nice standard TA chart: bouncing off its 200MA.
By the way, the bounce seems to occur on decreasing volume, but we are still early in the day and we will probably have a bounce on strong volume today.

I also attach below visuals on where to click in order to quickly view the EV pattern of all the stocks in one sector.


Pascal

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I am trading GDX in my IRA account. I can not short ETFs in this account. Would the inverse double short gold miners ETF "DUST" work OK for the short signals? Should I reduce my position size by half if I use it?
Steve

I'd known about the sectors areas and should have remembered, but you've also identified some other good ideas such as checking the GDX robot and the Canadian counterpart stocks that I can use in the future.
Thanks,
Dan

[QUOTE=slgerritz;13885]I am trading GDX in my IRA account. I can not short ETFs in this account. Would the inverse double short gold miners ETF "DUST" work OK for the short signals? Should I reduce my position size by half if I use it?
Steve[/QUOTE]

Steve,
DUST only trades about 120,000 shares a day, so I would only use it with small size limit orders. And then, yes, reducing the position by half compared to a short of GDX can help approximate the strategy.
Billy

[QUOTE=Billy;13911] ... yes, reducing the position by half compared to a short of GDX can help approximate the strategy.
Billy[/QUOTE]

I would also monitor for price distortions caused by compounding. If significant (say, off by >5-10 percent), you could add or sell shares to conform to what you would achieve with a short GDX position.