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Robert Edwards
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Contrarian daytrading technician who specializes in locating high probability short term trades while predicting price movement directions with over 85% accuracy. Most of my trading involves either extremely short term micro scalping of stocks or commodities (using 1 minute bar charts), or swing... More
  • Gold Could Fall For Another Week Which Could Help DUST Explode Higher! 8 comments
    Sep 7, 2013 10:49 AM | about stocks: DUST, NUGT, GLD, GDX

    (click to enlarge)

    I just wrote an article indicating DUST could be about to explode higher, that you can read here. Well, it did not occur on Friday but I did go home long 400 DUST shares due to the fact gold could fall for another week.

    Gold Should Fall For Another Week And Not Bottom Until Sept. 13th

    If you look at the above chart of December gold futures, you will notice how in early May, gold started a down move that lasted 12 trading days. After a consolidation, in June 2013, we topped and then started a down move that lasted 16 trading days. After moving out of the bottom, in the middle of July we started a down move that lasted exactly 12 trading days again. Well, we recently topped in gold and Friday was the 7th trading day of the down move. Based on past down cycles, I am now predicting that the move should last another 5 trading days so Friday, September 13th, should be the earliest that we bottom in gold. If we continue falling in gold next week, it will coincide with the pop that I already predicted in DUST. History does not have to repeat itself of course, but these cycles usually last more than just 7 trading days. At Kitco.com, the weekly survey of dealers advisors and trading managers is predicting an up move next week in gold, but I am going the other way. I feel my bearish argument is made stronger because the 4th and 7th day of the current down move were countertrend rallies corresponds to the same 4th and 7th day countertrend rallies that we saw in early May. In the July down move that lasted 12 days, the 4th and 7th days were down days but both times we rallied strongly in the morning and made highs prior to selling off. The rhythm of the current market move is falling in sync with the previous 12 duration day down moves and I feel that odds favor at least 12 days to complete the current down cycle. I will be looking for gold to bottom in another week and will in fact probably go long gold next Friday, Sept. 13, 2013, if the down move does occur as planned.

    Disclosure: I am long DUST.

    Stocks: DUST, NUGT, GLD, GDX
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Comments (8)
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  • Robert, do futures contracts expire next week, and have you correlated this pattern with futures expirations in the cycle you've identified and are trading around? What I'm getting at is much like the metals are pushed down during the trading day and reach their lows at the London PM Fix time, does this pattern coincide with similar activity.

     

    If the answer is yes, the pattern coincides with futures expirations, I could see that, otherwise, I don't see a reason for this pattern and I wish you all the luck.
    7 Sep 2013, 05:29 PM Reply Like
  • Accurate predication so far Robert with just 1 wrong out of 10 correct. Except the DUST sell off last month, If one were to trade with your predictions, they would make much higher money than they would loose. You now have another opportunity to write a post with someone going with your prediction with say 10,000$ (series of posts) in last couple of months and they would be surprised to see their profits. Or even considering one or two discarded predictions, they would still make profits.
    10 Sep 2013, 04:26 PM Reply Like
  • Author’s reply » Thanks AKM. DUST went much lower than I imagined but it rebounded and I was able to get my money back without getting back to $30. That is more important than making an accurate prediction. Knowing how to trade out of a loser is the most important skill a trader can learn.

     

    I stayed constructive on DUST and today we broke out above $30 resistance and I am looking for a rally through Friday I will reappraise after that.
    10 Sep 2013, 07:49 PM Reply Like
  • agreed.
    11 Sep 2013, 09:44 PM Reply Like
  • Robert, What's your prediction on the high for DUST by Friday the 13th?
    10 Sep 2013, 04:26 PM Reply Like
  • Author’s reply » Looking for $35 to $37 minimum short-term target. Eventually it has the potential to get back to $50 but not by this Friday.
    10 Sep 2013, 07:50 PM Reply Like
  • Hey, I've predicted similar movement for DUST as well.

     

    Thanks to you, however, I've been trading with less stress for the past few weeks. Long story-short, after reading your posts from six months back on DUST and seeing almost 100% correlation with your predictions as well as recent on the mark shots I've traded with more confidence myself. So thanks :).
    My prediction, however, was that dust had potential to top of at about 40-45$. However, there has been recently a lot of talk on gold rebounding. GLD and HUI now made several higher lows too.
    My question to you is then, do you think DUST still has potential for that on Monday (I'm expecting it to settle by Friday and maybe make one last spike like on 9/1013 and 9/12/13) or do you think its a risky proposition? Do you think it would be a good time to go short on NUGT instead maybe?
    12 Sep 2013, 08:47 PM Reply Like
  • Author’s reply » Today appears to correspond to the nice up day of Monday June 24, 2013. If I am correct, Friday we should go sideways and barely close up after some retracement (typical Friday) and then Monday we pop to the big high, which would be maybe 40 right now. I am thinking that instead of Friday being the end of the DUST rally, it could go through Monday to really hurt the bears and force them to cover. After that we can fall hard and nearly fill the gap under 30, just like we fell hard in 3 days off the top back in June. If DUST tops on Monday, I will want to be getting long DUST when it trades a little under 30 next Wednesday, if it follows the June scenario. Either way, Friday or Monday is probably the end of the DUST rally for at least 2-3 days, and then it should be a buy again. During the correction, one could play NUGT for sure, and you might be catching a major low if DUST tops out for 3-5 weeks like you have happen when you stop going up on a major up move.

     

    If I am wrong about a turn and the tapering news hurts gold, NUGT could keep falling and DUST keep rallying. How far?
    GDX closed today around 25.29 and GDX has support at 24 and 23. If it stops falling at 24 then that is a drop of 5.1% which multiplied by 3, you get 15.3% further rally in DUST from the close today of 36.28 equals 41.83. If you calculate NUGT closed today 54.08 then it could drop 15.3% to 45.80.

     

    If GDX falls to 23 then that is another drop of about 4% which is another 12% up and down in DUST & NUGT from the prices I just predicted, so DUST would be 46.85 and NUGT would be 40.30.

     

    So if you buy NUGT at 54 or even 50, you might have to carry through a short term bottom of 47 or maybe 40, if you get in too soon. That is your risk anyway.
    12 Sep 2013, 09:47 PM Reply Like
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