GDX Update

[Billy]

GDX filled the gap of last Thursday, breaching the lower support trendline of its consolidation triangle. But its RS vs.GLD never even touched its own support line and is already trading back above the former declining resistance line. This is a bullish development. Another one is that, due to Columbus Day, the 5 largest component stocks are all trading at about 50% lower volume than on Friday at the same time of day. So the decline is under control of the large players and the PM MF is only 0.04% lower than on Friday’s close. I entered a long NUGT position around GDX=VWAP=Daily S1 =53.20 with an EOD stop < Weekly S1 (GDX 52.63).
Billy

[Billy]

I have adapted the triangle lines to the new reality. The new uptrend support line is starting at the GDX flash crash low of August 1 and connecting the August 31 low.
There is a shake-out attempt at breaking that longer term uptrennding support. Since GDX is somewhat oversold in the short term, it is logical to see some buyers in this area. The RT PM MF was mostly flat but stabilizing out of its decline during the support trendline test. But it remains on a short signal. GDX is technically very vulnerable here and any convincing breach of support could lead to serious damage. On a reward risk perspective, nimble traders can go long here close to support which I would use as an EOD stop for a at least a short term trade.

I am still long my NUGT entered yesterday at GDX = 53.20 and will hold my initial plan of an EOD stop < Weekly S1 (52.63). That level was broken most of intraday but is currently taken back.
I’d like to remind you that today is the 7th trading day of October when statistically the lowest close of the Quarter is expected to be in for SPX. I would be really concerned if we didn’t see some strength starting tomorrow or on Thursday. Tomorrow is a very large operation twist bonds selling day. On top of seasonal earnings protection, Institutions may just be taking some profits out of equities to buy those bonds tomorrow. Thursday, bond buying by the Fed will be back with fresh liquidity available again to boost equities and hopefully the leading Precious metals sector.
Billy

[Billy]

I am out of NUGT at GDX = 52.35. The breach of support is too convincing. Once again, it proves dangerous to go against the RT GDX model signals…
Billy

[Charl]

Thanx Billy for posting the Analysis,setup and trade here.

charl