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Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he... More
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  • NUGT - Is There A Reason To Buy? 1 comment
    Nov 12, 2013 12:45 AM

    Monday 11 November 2013

    This is an e-mail response to an inquiry on NUGT, Direxion Gold Miner
    Bull 3X Shares. After sending it, there was no reason to let it go to
    waste, so it is being posted for those who have an interest in this
    [wrong, in our opinion] approach to gold.

    Essentially, this shows that it does not matter what the underlying is
    behind a chart, be it futures, etfs, stocks, they all tell a story of how
    the participants are positioning themselves in the market.

    The writing is more casual, as an e-mail, but the chart contents and
    their message it what matters.

    Cheers :

    It escapes me why there is any interest in NUGT. Those considering it as a buy potential are basing their decision on hope only, for it exhibits not a single reason to be a buy candidate. I looked at other gold
    miner etfs, and they all belong in a dog pound. This is said from a
    perspective that there is one, and one reason only, to trade, and that
    is to be profitable. No such potential here.

    This daily, and the comments on the chart, require no further

    NUGT D 12 Nov 13

    On a closer activity look, shortening the time period covered to see
    something more than the above, you can read the comments. That
    volume spike in mid-September was huge supply coming onto the
    market. I drew an obvious TR between 60 and about 38. Even when
    price rallies above 60, that overhead supply from mid-September will
    find trapped buyers happy to sell their positions just to break even,
    and that higher price area will act as resistance, in the process.

    Barring a major event to propel gold a few hundred dollars overnight,
    [anything can happen], the prospects for future rallies in NUGT will be
    met with a lot of overhead sellers.

    NUGT D 2 12 Nov 13

    Just for drill, I added a longer term, [more controlling] weekly chart:

    NUGT W 12 Nov 13

    Finally, I looked at an intra day. What you see should be no surprise based on the higher time frames. Within the TR on the 2nd daily chart, above, you see additional bearish activity in the form of a gap down
    on 1 November, and the ensuing swing rally high fails to fill that gap,
    leaving what is called "bearish spacing." Sellers are so confident that
    they do not need to see if/how the gap will be tested, they just keep
    pressing the market lower.

    No matter what time frame is considered, one is as bearish as the

    NUGT 60m 12 Nov 13

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Comments (1)
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  • Tactical Technician
    , contributor
    Comments (146) | Send Message
    It's a triple ETF, using a chart for NUGT is redundant. If gold stocks rise, overhead resistance simply won't matter.
    12 Nov 2013, 12:59 AM Reply Like
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