I’m very pleased with the breakdown in crude oil and in Mexico (EWW), both of which I’ve written about quite a lot lately. One trade that hasn’t blossomed yet is my DUST (triple-short on precious metals miners) long, but I’m keeping the faith. Looking at the big picture of, say, NUGT, this seems quite bearish. It might get a little more strength, sure, but I think in the end it’ll work out.
It’s going to be a very rainy day here in the Bay Area, so why not relax with some ETF charts (OK, that makes no sense, but I can’t think of an introduction).
The “diamonds’ remain in a DNAAB (Desperately Need An Ass-Beating) pattern. (pronounced ‘de-nab’).
Many of you know that yesterday morning I had two small positions in GDX and GDXJ on the short side. They got instantly stopped out due to an explosive gold rally.
However, in the middle of the day, when gold was up nearly $19/ounce, I did a Slope Plus post called How to Handle Miners in which I stated the obvious (that the miners short was stopped out) but also the not-so-obvious, which is that I thought the big rally was countertrend and should be faded. Thus, I bought DUST, the triple-bearish-on-miners ETF.
Well, given the action so far, it looks like the gold rally is at least partly reversing, which is good. The next big question is how it handles that gap (green tint). Does it fill it and strengthen or does it slip below and resume its bearish ways?