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Paul Mosgovoy
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Truth is timeless: “Markets never change” – Jesse Livermore, 1923 The early masters, Livermore, Wyckoff and Loeb isolated themselves from the crowd and crowd thinking. None of them ever graduated high-school and yet they each became legends in the market. Their techniques have been time-tested.... More
  • Market Summary: DUST, GDX 3 comments
    Apr 8, 2014 5:29 PM | about stocks: DUST, GDX

    To get a better perspective of what is going on in the gold market, let's start with the Market Vectors Gold Miners ETF (NYSEARCA:GDX). We will use this index as the proxy for the Direxion Daily Gold Miners Bear 3X Shares ETF (NYSEARCA:DUST).

    (click to enlarge)GDX Daily

    Chart by TeleChart

    We can see that today was a push and close above resistance. What is not shown on the chart is that this push is also within a 38% retracement area.

    This type of retracement is normal market behavior. If the GDX reverses from here, we will be assured to some extent that the prior down-trend is continuing.

    Volume has contracted during this retracement period. Light volume typically indicates that the main trend is down.

    If we look at the picture from another perspective....that of the bulls who say the gold market is in an uptrend:

    (click to enlarge)GDX Daily

    Chart by TeleChart

    Looking from the bull side, we see a deep 62% retracement of the move from the December 2013, low.

    Typically, if a move gets past 50%, it is weak and time to start thinking about going short.......as we are doing.

    Disclosure: I am long DUST.

    Stocks: DUST, GDX
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Comments (3)
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  • almoni
    , contributor
    Comments (98) | Send Message
     
    I don't see logic in bugs gdx
    - I don't understand wave structure now - but I still in Long positions in medium term
    \ up to end of year 2014 \
    9 Apr 2014, 02:50 PM Reply Like
  • SpikerLexus
    , contributor
    Comments (6) | Send Message
     
    Believing in the fundamental gold story does not mean that you have to be a bull twenty four seven. Long DUST for the next few days!
    9 Apr 2014, 06:09 PM Reply Like
  • Paul Mosgovoy
    , contributor
    Comments (119) | Send Message
     
    Author’s reply » Agreed,

     

    If the charts indicate that down is more probable than up at the moment, then they should be used to position accordingly. There is no telling how far a down-move or an up-move will go.

     

    Years ago, I remember that I was long on the 30-year bond (1998...if I remember) and it had an adverse move....I decided to hold on. Well, it went down (rates up) much farther and lasted much longer than what I expected......don't know if it ever got back to my entry point....... enough of that.

     

    As Richard D. Wyckoff said nearly one-hundred years ago: "I trade to invest."

     

    He meant that profits on short to mid term moves gave him the cash to invest in real assets......things that are not made of paper.

     

    Thanks for the comment.
    9 Apr 2014, 06:57 PM Reply Like
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