Secondary Entry For GDX - March 28, 2012

[Billy]

GDX was under pressure yesterday as large players were distributing shares all day long after a promising opening. The RT model whipsawed twice around its protection level and ended the day short. But the most important protection level is the one for the EOD GDX robot and it is still 1.43 average day away, below the average MF – porosity (-.083).

A secondary entry is advised today at a limit of 49.70, just below the 5-day VWAP (49.85) and above the Weekly pivot (49.57). With a protection level so near by now, this looks like a good opportunity of buying into weakness. The ST/LT edges are strengthening everyday.

Floor clusters remain almost neutral and hence, we should focus on the Money Flow and VWAPs as being more relevant than intraday price gyrations at this juncture. We’d like to see GDX close a fourth day in a row above the 5-day VWAP (49.85) to gain confidence in this trade. End-of quarter window dressing by funds may hinder somehow the trade progress because the theory says they should be selling the laggard gold mines. A stable or rising MF from here should then be viewed as exceptionally constructive action.
Billy

[brrim]

RT 20 DMF is currently 0.35%. That puts us below the 20 DMF 50 dma at 0.444% (orange line).
The recent MF low was 0.333% on 3/22/12.
Best regards,
Robert

[Adriano]

Billy/Pascal,

GDX stop at 47.94 is well below the recent lows, while NUGT at 15.66 is clearly above. Is NUGT stop correct? I know they are different animals, but in this case the difference is not minor. I guess it is better to follow GDX anyway. Thank you.

[Billy]

Billy/Pascal,

GDX stop at 47.94 is well below the recent lows, while NUGT at 15.66 is clearly above. Is NUGT stop correct? I know they are different animals, but in this case the difference is not minor. I guess it is better to follow GDX anyway. Thank you.

Adriano,
We keep repeating that stops are indicative for anything else than GDX. The stop for NUGT is automatically estimated taking into account volatility and time decay but it is always an estimate.
If you trade other related ETFs than GDX, the stop should be conditional to GDX hitting its own stop.
Billy

[Adriano]

Yes, that is why I said it is better to follow GDX anyway. I asked because there have been occasions in which some values were wrong.