Seeking Alpha

Robert Edwards'  Instablog

Robert Edwards
Send Message
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
  • After Today's Smackdown I Again Like Buying Dips On DUST! 10 comments
    Sep 18, 2013 6:54 PM | about stocks: GDX, GLD, DUST, NUGT

    In my last article you can find here, I predicted DUST would go down, up, down, down, or just 3 straight down. It did the former. Thanks to the FED not tapering today, DUST has now done a mini crash and in one day it has wiped out gains of the 15 previous days! Remarkable! Take a look at the chart:

    (click to enlarge)

    WARNING: If you have not read my article regarding dangers of trading triple ETFs like DUST & NUGT, click here.

    If you follow the Stock Talk comments I make during the day, I was reading signs to say gold, GDX, and NUGT would boom after the announcement on tapering. However, I felt there would probably be some taper and some dip to get in lower. With no taper, it boomed and looking back, I should had gone with the momentum for just today and bought NUGT the moment it hit 61 and taken easy money. No one is perfect, and one major flaw that I have as a trader, I often skip the "easy money" trade. I am such a contrarian, I start fading the good news almost the very moment it comes out. Today, I started buying DUST a bit early. Playing really small and catching a late day bounce, I did ok but I should have rode the NUGT happy train rally for the remainder of the day. The problem is that I have a bias that favors DUST over NUGT and it is hard for me to buy NUGT except at the lowest of prices. After the big gap I was afraid to chase it. Despite today's rally, NUGT is still locked in a death spiral, down from $1885. Despite the rally in gold, the yellow metal has resistance just ahead at $1375 & $1400 and nothing fundamentally has changed. No taper today but it is just a delay. Ultimately a taper will occur. It has to. Today's "non-taper" decision by the FED is short-term bullish for gold, and long-term bearish. I doubt the party will last even to the end of this week.

    I Choose To Buy DUST On Dips Until The Cows Come In

    Be warned that I am buying early and picking a bottom in DUST. If you are still bullish NUGT, you can probably still make money by holding a bit longer. Go ahead if you like.

    But after today's selloff, I would rather be long DUST under $25 than I want to be long NUGT above $70. I will continue buying early and often. I will take profits on small rallies and reposition lower and lower. I can't tell you how happy I am to be able to purchase DUST shares below $25 again.

    When I want protection I will buy gold futures to hedge, as a major rally in gold is the only thing that can hurt my DUST position.

    Where Do We Go From Here?

    Just look at what DUST did in the past. First of all, DUST is down 3 of the last 4 days, so it should be quite bouncy and profitably purchased on dips for the rest of the week. Also,back when DUST closed under $25 for the first time in months, back on August 15th, we went up the following two days. Then we fell 4 of the next 5 days and made the major bottom at $20.10. Next came the recent rally to a high of $37.25 that was accomplished in just 12 days.

    I was counting on a minor taper that would drop us down to $29 in DUST and then we could rally back towards $45. But with today's smackdown, one must play more defensively and reduce the target to $30, which we should see within the next couple weeks. Thursday could be lower, especially early in the day, but there is a good chance we can hit $27 by Friday. If we roll over after that we could trade down to $20 or even $17 at worst, but then should work on a rally back to $30.

    GDX has rallied back to the mid 28s today and now has resistance at $29, $30 and major resistance above $31. Here is the chart:

    (click to enlarge)

    Disclosure: I am long DUST.

    Stocks: GDX, GLD, DUST, NUGT
Back To Robert Edwards' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (10)
Track new comments
  • Robert Edwards
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » Today looks very similar in GDX like June 28, 2013. We have a long white candle coming out of a low. The next day (July1st) we rallied a bit more and made a doji. We then fell for another week. Same could occur again.
    18 Sep 2013, 07:59 PM Reply Like
  • ricejudicata
    , contributor
    Comments (17) | Send Message
     
    Robert, I understand you trade this ETF. Is that why you discount the impact of the upcoming debt ceiling debate, and its temporary effect on gold prices in the next three-four weeks?

     

    I dodged the bullet today on DUST and switched over to NUGT the minute the fed released it's statement for a little gain. I want to hang on to NUGT until the debt ceiling issue is resolved, but like you, I don't feel that anything has change with regard to gold pricing and we will ultimately see gold head to 1200ish. Just wanted to know your thoughts.
    18 Sep 2013, 09:19 PM Reply Like
  • Robert Edwards
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » In my Stock Talk Comments today I posted that the breakdown of Congress and the federal budget impasse is bearish for gold and not bullish. It should hurt the stock market, and rally the dollar and hurt gold. A financial crisis like what occurred in 2008 was bearish gold and not bullish. It did rally big to all-time highs a year later but the first path of the crisis was lower in gold. The up part came later.

     

    So far NUGT failed to add on because it overdid it to the upside yesterday. Today it did bounce $4.50 from 63.50 to 68 so if you an get in NUGT on Friday between $61 & $60 then you should see another nice bounce. These NUGT & DUST require a bullish or bearish bias to get in, but you are rewarded getting out quick, like NUGT at 75. Gains evaporate almost instantly and it is hard to stay in for the long pull. I am scared out of my willies to hold any size longer than a few hours or maybe overnight.
    19 Sep 2013, 05:49 PM Reply Like
  • ricejudicata
    , contributor
    Comments (17) | Send Message
     
    Thanks your your insight, Robert. Very helpful.
    20 Sep 2013, 01:35 AM Reply Like
  • UncleSam187
    , contributor
    Comments (177) | Send Message
     
    dude look at the DUST chart you posted. H&S top, retested neckline, then rejection. Your 50 is about to deathcross your 200.
    opposite on GDX,
    inverse H&S , even your indicators are negatively diverging towards bullishness.

     

    I have a job so I can't trade the 5 min charts on 3 x funds, but maybe you should post your entry and exit points in shorter time frames
    19 Sep 2013, 01:01 AM Reply Like
  • Robert Edwards
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » Hey UncleSammy, don't call me dude. I do post my trades and thoughts in stock talk every day so you can get the play by play. I have been right and continue to be right, calling a top in DUST last week, then calling the exact moves every day this week. Maybe I am just lucky. I know all you are telling me about the technicals. I am just saying what I see and so far, I sees pretty good.
    19 Sep 2013, 12:31 PM Reply Like
  • tanriseven
    , contributor
    Comments (9) | Send Message
     
    Besides technicals, Robert generally follows the patterns of GOLD, DUST and NUGT. He is pretty accurate on that.
    19 Sep 2013, 09:07 AM Reply Like
  • Robert Edwards
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » Thanks T-7. I took a little heat switching from bullish NUGT to bearish right after the pop yesterday in NUGT. Everyone was so sure NUGT was heading for 90 if not 100 and the big rally was just beginning. I predicted a week ago that a Fed Decision gold pop would probably only last that day or maybe till the next morning. That did occur as GDX faded again today and the up Thursday for DUST is looking really likely. A secret: Sometimes I don't believe what my cycles are telling me but I print my signals just like I get them anyway as my system knows more than I do. I quit second guessing long ago. Just go with the flow.
    19 Sep 2013, 05:55 PM Reply Like
  • $DUST
    , contributor
    Comments (51) | Send Message
     
    rode the first 10 min dust ride made ez 300 and im done for the day. :P
    19 Sep 2013, 06:20 PM Reply Like
  • Robert Edwards
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » That is a trader after my own heart. Get the easy early trade and move on. You made your quota. Mission accomplished!
    19 Sep 2013, 10:30 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.