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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
  • Robert Edwards: DUST & NUGT Comments For Week Of Sept. 16, 2013 10 comments
    Sep 15, 2013 12:02 AM | about stocks: NUGT, DUST, GDX, GLD

    (click to enlarge)

    What a great week last week! Before we talk about this week, anyone who has not looked at my article about the hazards of triple leveraged ETFs should click here.

    Friday's Action Is Most Similar To The Action Of 2/21/13

    If you look at the above DUST chart going back to the beginning of this year, I have identified February 21, 2013 as the day most reflective of the action we had on Friday, Sept. 13, 2013. If you notice that a few days prior to Feb. 21st, we broke out above resistance at 22. The first day was a gap day up, a cautious pause day, a third day with a booming gap and high, and then a 4th day correcting down, the February 21st day I just mentioned. Now look all the way to the right of the chart and you see where we had resistance just below $30 marked as a line. Then we had a gap up day solidly above $30, followed by a pause day consisting of a flagpole. Then on the third day we had another booming gap and then Friday was a red bar, again the 4th day of the breakout move, similar to what occurred in February. If we follow exactly what occurred back in February, Monday, Sept. 16, 2013 should be a sideways day again with a minor up close. Then on Tuesday and Wednesday we should fall a bit in DUST.

    Thus it looks very unlikely that Monday will be a final gap up day in DUST. If we go sideways but manage to close higher I would use that opportunity to get out of all longs in DUST if you are still in. With Friday being the first red candle, we should get two more red candles to make a low. If Monday is up then Tuesday and Wednesday will complete the 3 red candles if we go down the last two days. If Monday and Tuesday are down days then we will have our three red candles, and I would say that Wednesday is likely an up day in DUST.

    Blue Triangles On Chart Mark 3-4 Day Corrections

    The most likely correction I foresee in DUST next week is down 3 days through Tuesday, or down 3 of 4 days through Wednesday, counting Friday as the first down day. This is a common correction pattern for DUST, as seen by the many blue triangles that I placed on the above chart. I am looking for a similar 3-4 day correction here where DUST goes no lower than $29, followed by another possible rally to $42 to $45 possibly. I plan to play NUGT on the long side early next week.

    The Fed Decision On Tapering Is Wednesday, 9/18/13

    This puts a monkey wrench into trading next week. My feelings now are that a small Fed taper is priced into the market and the reaction is likely going to be muted. I am leaning 60/40 on a bullish reaction in gold on no taper occurring, or dovish comments. I prefer buying NUGT on dips prior to the Fed decision, especially if DUST rallies some on Monday and allows me to buy NUGT at a small discount from Friday. I will decide later if I stay in through the announcement. If NUGT rallies Wednesday following the fed decision, I doubt the rally will be sustained and expect to probably switch back to going long DUST Thursday and Friday. These are my plans right now and are completely subject to change.

    Disclosure: I am long NUGT.

    Stocks: NUGT, DUST, GDX, GLD
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Comments (10)
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  • glaserdx
    , contributor
    Comments (194) | Send Message
     
    Thank you Robert
    15 Sep 2013, 11:03 AM Reply Like
  • Robert Edwards
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » Friday's action is a Bearish Dark Cloud Cover pattern, warning of a reversal down. It works about 65 to 75% of the time. For more info, click here: http://bit.ly/15v7A9Z
    15 Sep 2013, 12:00 PM Reply Like
  • Robert Edwards
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » Friday's action is a Bearish Dark Cloud Cover pattern, warning of a reversal down. It works about 65 to 75% of the time.
    15 Sep 2013, 12:00 PM Reply Like
  • rodh7858
    , contributor
    Comments (138) | Send Message
     
    Robert - Just to clarify its a reversal in DUST right?
    15 Sep 2013, 02:51 PM Reply Like
  • Robert Edwards
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » Correct, it is DUST what is giving a bearish signal.
    15 Sep 2013, 02:58 PM Reply Like
  • rodh7858
    , contributor
    Comments (138) | Send Message
     
    Thank you Rob.

     

    What are your thoughts on gold for coming week? How much weight you put on Syria news we got on Saturday for gold? What impact do you see on DUST/NUGT from gold?
    15 Sep 2013, 03:05 PM Reply Like
  • Robert Edwards
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » If gold sells off next week, it should not fall lower than 1275 in dec. gold futures and may not go under 1290. If we rally gold could pop pretty good, back to 1400. Buy the rumor, sell the fact, could be a tendency to rally in gold even if we do get a small taper, as selling already done in anticipation of the news. Any big move should be up. Favors going long, especially on post announcement selloff. Still have not decided if I will be long through the announcement but you can be sure I will be trading post announcement, LOL!!
    15 Sep 2013, 03:15 PM Reply Like
  • Robert Edwards
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » If I buy gold futures post announcement on Wedn, I will be watching for a low in DUST towards 30 or 29 to buy some dust off the low. I would then be spread off buying dips in DUST while going long gold futures.
    15 Sep 2013, 03:20 PM Reply Like
  • $DUST
    , contributor
    Comments (51) | Send Message
     
    I'm curious, how far do you think will nugt rally? And do you think DUST will breach its 20$ low?
    18 Sep 2013, 11:24 PM Reply Like
  • Robert Edwards
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » If you read my latest article, I tell you where I think we are headed. I think we could bounce back to 27 and then will probably roll over in DUST and hit 20 or maybe 17. After that we should work our way back to 30.
    19 Sep 2013, 08:48 AM Reply Like
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