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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
  • GDX: Following The Plan For Capitulation 5 comments
    May 30, 2014 12:30 PM | about stocks: GDX

    Taking the expanded channel concept that was presented in the previous update, we can see that a wash-out event is a real possibility. If that assessment is correct, we are still in the early stages.

    Note that the channel line has been adjusted to show multiple contact points during late 2013. So, it is a bit wider than what was presented.

    The weekly chart of the Market Vectors Daily Gold Miner (NYSEARCA:GDX) has the updated channel shown below.

    (click to enlarge)GDX Weekly

    Chart by TeleChart

    So far, it looks like it will be another good day for the Direxion Daily Gold Miners Bear 3X ETF (NYSEARCA:DUST).

    The initial position that was established at 23.78 is now up a solid 27%.

    Disclosure: I am long DUST.

    Stocks: GDX
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Comments (5)
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  • John Wilson
    , contributor
    Comments (1981) | Send Message
     
    Paul
    I too was long (DUST). I bought it as a hedge yesterday 5/29 around 30.50 thinking that I was still early enough in the gold downtrend that I would get some protection with DUST against the coming gold decline. And gold did decline $12 Thursday and about $8 today (intra-day). And what did DUST do? It turned around at the 200 day MA and retreated. The "gold is going to tank" hype was played up so loud that I thought DUST actually had a chance of clearing its 200 day MA, but the mining stocks rallied even as gold dropped almost $20 and my DUST got stopped out.

     

    Now it looks like DUST could revisit the 25 to 26 level where it began its move from which is also the 50 day MA.

     

    I tried to make it work. I even gave DUST $2 downside before triggering a stop order.

     

    One thing about the rationale of your chart with the channels and the GDX downside target. If it snows 6 inches each week in December, we can't calculate and say, "If it keeps snowing at this rate we will have 10 feet by Memorial Day." I am not looking for that target to be reached. The H&S bottom will have to play out first, and it may possibly be completed/confirmed.
    31 May 2014, 12:15 AM Reply Like
  • ptTL9
    , contributor
    Comments (273) | Send Message
     
    Paul,
    I sold DUST, at 30 and bought/sold JNUG yesterday. Now will we move up for few days, or drop immediately?
    31 May 2014, 09:55 AM Reply Like
  • Paul Mosgovoy
    , contributor
    Comments (119) | Send Message
     
    Author’s reply » Thank you John for the input,

     

    In a prior update I indicated that there was the potential for GDX to bounce and test the breakout......although that bounce was unlikely.

     

    It may do that still. However, looking at the price action of Friday, it is parabolic..........near vertical to the close (and then very high volume in the last few minutes).

     

    This is not what is typical of a move that is building momentum for a test. That may happen in subsequent sessions but for now I am looking at it as a move to take out stops..........

     

    Martha Stokes, a CMT has a very good quote about price action and stops

     

    http://bit.ly/1rtSdKW

     

    Point No. 5 essentially states that if too many stops get piled up at any location in the market, then the computerized response is automatic.........orders will be generated to take out the stops.

     

    That is the way that I view the action of Friday......

     

    If/when I make entries, I post nearly immediately (within just a minute or so) that an entry (or exit) was made.

     

    The last such post was on 5/16/14 when DUST was in the 25-area. The initial position was taken on 5/12/14 when DUST was around 24.

     

    I am not saying that anyone follow my actions. All that is being offered on this site is how a position is taken based on an initial premise..........that the small investor will be completely wiped out of the gold market before there is a sustainable multi-year rally.

     

    The behavior of the market thus far is showing that to be the case. It is very interesting to watch all of the price action moves whose sole intent is to make sure that it will trap the largest number of bulls possible and leave the shorts behind.

     

    It is not much fun to be long DUST and see it retrace as it did on Friday. However, the initial positions are still well in the green and since this trade is being managed on a weekly (chart) basis, I have no signal to exit.

     

    It may turn out that the premise is wrong. I am ok with that. However, if it is wrong and I do exit it will still most likely be a profitable trade.

     

    I continue to monitor price action and if another entry signal is generated (that I act on) it too will be posted within a few minutes of being initiated.

     

    As a side note, the initial two entries were never retraced more than 2% on an intra-day basis........and I consider these trades poor entries.

     

    As with the entries made on Randgold (GOLD) at the beginning of the year (and documented on previous posts), the tools that I have developed allow me to get within pennies of the low.

     

    Thank you again for your comments.

     

    Paul
    31 May 2014, 11:11 AM Reply Like
  • Paul Mosgovoy
    , contributor
    Comments (119) | Send Message
     
    Author’s reply » Thanks ptTL9,

     

    My comments to John Wilson above indicate how I see the market action of Friday. Please refer to that reply.

     

    We might know by the close on Monday if there is going to be a based building period for a test of the down-side breakout.

     

    Thanks again,

     

    Paul
    31 May 2014, 11:16 AM Reply Like
  • ptTL9
    , contributor
    Comments (273) | Send Message
     
    Thanks, Paul

     

    Have a great weekend!
    31 May 2014, 11:34 AM Reply Like
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