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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
  • GDX Just Bottomed So I Will Be Buying All Dips Down To 24 For Now 13 comments
    Oct 18, 2013 12:14 AM | about stocks: GDX, NUGT, GLD, DUST

    The above daily chart of NUGT shows the engulfing pattern buy signal that was formed on Tuesday, and finally confirmed today, Thursday, October 17, 2013, when we moved up strongly out of the hole. The chart comes from americanbulls.com website (click here), where anyone can punch in a symbol to see if they should be long, short, or flat a security or ETF. Following their signals, $100 would be turned into $4,987 in the last 24 months, trading NUGT. Pretty impressive! Today americanbulls.com switched from being short NUGT to going long, at $44.05. Of the last 13 times they switched from short NUGT to long NUGT, they made money 10 times and lost 3 times. That is a winning percentage of 77%.

    Is Today's Pop A One Day Wonder, Or The Beginning Of A Bull Trend?

    Trent Wagner of The FOX Group (click here), thinks that today's $40 pop in gold, moving solidly back above $1300, is a one day wonder, similar to when the Fed surprised the market by not tapering, back on Sept. 18, 2013. I totally disagree. I believe today's move has some staying power, and both GDX and NUGT should work towards a high that will not be reached for 8 to 10 trading days. Thus, we should have just started an up move in both gold and the gold mining stocks, that should work higher for possibly the next 2 weeks. To see what I am talking about, just look at the following daily chart of GDX:

    (click to enlarge)

    The above daily candlestick chart of GDX, shows today's gap up bullish white candlestick. I compared this pattern to what came before, and noticed that July 11, 2013, there is a similar day. I have marked the above chart by circling the July 11, 2013 candle and calling it the double, or doppelganger, of today's candlestick. In July we consolidated for a couple days after gapping up, but maintained the gap by not trading into it. If we repeat the same pattern now, we could go sideways one to two days, but basically stay above 24, leaving the gap. Then Monday or Tuesday we should have another long white candlestick moving higher, and eventually topping out 8 to 10 trading days from now.

    In addition to the July pattern, I also circled a candlestick in late May 2013, on the above chart, showing where we gapped up and then held the gap support for a similar rally move that lasted 9 additional trading days. Also on the chart I circled a gap up move in mid August that caused 10 days of rallying before topping out.

    If however, I am wrong, and today's pop is a one day wonder, it could be similar to September 25, 2013. Even then we went sideways and had a couple days to get out at a profit, if a person was long on the gap up day close. At the very worst, a person should be able to buy all dips in GDX for the next two days, and get out at a profit, even if we are going to head back down. If we test support at 24 in the next two days, that should be a fantastic buy zone for anyone who is not already long, or if one wants to add shares.

    Conclusion

    Those longs in GDX & NUGT, who stuck it out with me through the bottom, were rewarded today with a nice rally. Congratulations! If I am correct, that we should continue in an uptrend for the next 8 to 10 trading days, we should work our way up to 27 or 28 in GDX in the next couple weeks, and NUGT could easily reach 60 to 65. If I am wrong about the change in trend from bearish to bullish, then GDX and NUGT should still be a buy on dips for the next couple days. As trading unfolds on Friday and Monday, I will comment on what I see and let everyone know which pattern I see confirming; the 2 week uptrend, or the 2 day consolidation that then turns lower. Happy trading all!

    Disclosure: I am long GDX.

    Additional disclosure: I am also long NUGT

    Stocks: GDX, NUGT, GLD, DUST
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Comments (13)
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  • WallysWrld
    , contributor
    Comments (4) | Send Message
     
    That was an absolutely outstanding call (and well written analysis) you made back on the 12th there Robert. At the time, things looked rather bleak, but holy cow look at NuGT now at 46! Thankyou for today's outlook as well and holding the line steady the last few days while I was shaking in my boots. WallysWrld
    18 Oct 2013, 05:18 AM Reply Like
  • WallysWrld
    , contributor
    Comments (4) | Send Message
     
    That was an absolutely outstanding call (and well written assement) you made back on the 12th Robert. At the time I was thinking the situation sure looked rather bleak, but holy cow look at NuGT now at 46. And todays analysis is impressive as well, thankyou so much for holding the line while I was shaking in my boots. WallysWrld
    18 Oct 2013, 05:25 AM Reply Like
  • Lefty6x6
    , contributor
    Comments (48) | Send Message
     
    Gold is simply being manipulated. the trend holds true though, and I agree that gold will rise over the next couple of weeks. those that can handle the sharp ups and downs will be rewarded soon.

     

    always consider hedging with some DUST as well. nothing wrong with playing it both ways.

     

    remember....panic is never profitable.
    18 Oct 2013, 09:12 AM Reply Like
  • Lefty6x6
    , contributor
    Comments (48) | Send Message
     
    Robert: fishing was great yesterday ! would not mind a repeat today either.

     

    if NUGT shoots up to 47.20, i'm out.

     

    already have the truck loaded up.....!
    18 Oct 2013, 09:14 AM Reply Like
  • Robert Edwards
    , contributor
    Comments (481) | Send Message
     
    Author’s reply » Update comment on article, after Friday's trading. If you look at the following gold chart from kitco.com, click http://bit.ly/H6n3Vd and you will see how gold has broken the downward line. Now gold could fall back to the line at 1300 on Monday and then pop back to the upside. I expect the 50 day moving average around 1341 to be tested next week, which should propel GDX higher. But first gold must take out 1330 resistance. The gold market does not really turn bullish till 1365 can be overcome.

     

    Today I was watching for the low of GDX to either be a bit under 24, which would have partially filled the large gap left yesterday from 23.28 to 24.09, or a moderate dip down to 24.15 to 24.25, or a shallow dip with the low higher than 24.25. We got the shallow dip, with the low of the day 24.30. On the low of the day, GDX was only down 20 cents, and closed down 12 cents. I consider this very impressive after a 1.22 gain on Thursday. I anticipate Monday staying above 24 again, and another day of consolidation. However, I expect a large move up in GDX on Tuesday that should correspond with a large move up in gold, helped out by a weak Sept. employment report that is being reported late. Regardless of the old number, the gov't shutdown slowed down the economy and should continue to provide support to gold and thus to miners. They have pushed the earliest taper talk to March 2014 with Yellen coming in January. I believe June 2014 is the earliest we get a taper of monthly bond buying by the Fed. We might even have to increase bond buying to overcome the slowdown from the Washington fiasco. Interest rates should work lower and gold higher, especially during a typically bullish 4th quarter. Seasonally October is a bottom followed by a nice rally, and it is looking more & more like the October low has already been seen. Aggressive Asian buying of physical gold is also supportive. Analysts are still bearish gold because they are looking backwards. The path ahead is looking moderately bullish with a steady move in gold towards 1375 and beyond, in the near-term. That gold chart showed a bullish line crossover on the MACD. Steady to higher prices in gold for the next couple weeks looks like the pathway ahead.
    18 Oct 2013, 06:40 PM Reply Like
  • johnpsychdoc
    , contributor
    Comments (7) | Send Message
     
    Hoping for the short term downtrending line on the daily chart of GDX beginning on August 27th will be taken out at today's close and that the 20 day MA continues to hold as support.
    21 Oct 2013, 12:46 PM Reply Like
  • user878
    , contributor
    Comments (108) | Send Message
     
    Robert,
    Today Nov 26th and we are hovering around $21.6 for GDX.
    Where u expect the next bottom?
    Is GDX a good buy now?
    26 Nov 2013, 03:22 PM Reply Like
  • Robert Edwards
    , contributor
    Comments (481) | Send Message
     
    Author’s reply » gold appears to be bottoming and this is an excellent place to buy gdx if bullish and can wait thru the pain. I will be quite surprised if GDX takes out 20 low and quite hopeful 21 or maybe the 21.52 low seen couple days ago is the bottom. If so, nowhere to go but up.
    27 Nov 2013, 08:00 AM Reply Like
  • user878
    , contributor
    Comments (108) | Send Message
     
    Robert, AmericanBulls are still short as of the moment.
    But why you think to wait thru the pain if we are around the bottom?
    27 Nov 2013, 12:34 PM Reply Like
  • Robert Edwards
    , contributor
    Comments (481) | Send Message
     
    Author’s reply » We are around the bottom, but some of us got in during a false breakout out of the low that occurred nearly 2 weeks ago. We r losing on the trade because GDX has greatly underperformed the gold metal and made marginal new 5 year lows. However, GDX has not added to those losses and is going sideways. We r trying to hold thru the pain to get to a higher breakeven price. No reason to sell out at the bottom if this is indeed the bottom. Might as well wait.
    27 Nov 2013, 10:41 PM Reply Like
  • user878
    , contributor
    Comments (108) | Send Message
     
    It looks like we get hit again and we have anew low for GDX.
    I gave up on this.
    I truley don't understand this precious metal market.
    I have a feeling need to sell and cut my losses, any one in the same boat with me?
    2 Dec 2013, 01:02 PM Reply Like
  • guest1979
    , contributor
    Comment (1) | Send Message
     
    Looks like you should have listened to Mr. Wagner. Picking bottoms doesn't seem to be your thing.
    19 Dec 2013, 06:09 PM Reply Like
  • foxgrouptrent
    , contributor
    Comment (1) | Send Message
     
    Hi Robert,

     

    It has been brought to my attention from a prospective client that you referenced an article of mine in your blog here from October 18. While I do not mind anybody having a differing opinion on a particular market than what I hold, I do mind someone paraphrasing my viewpoints expressed in the written article incorrectly. If you read the article that I wrote, in no place did I say that this particular move was "a one day wonder". In fact, I mentioned that the move may last for "a few sessions" and did not see the move lasting "very long" - both sentiments a decent cry from "one day wonder" status. My contact info is available on every article I've ever written - in the future, I would suggest that you contact me before paraphrasing my articles in your blog.

     

    Hopefully you're not still long gold.

     

    Trent Wagner
    19 Dec 2013, 08:32 PM Reply Like
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