I have a lot of shorts, and they tend to be heavily concentrated in the small cap and commodities space. Because of gold's and oil's strength this morning, I spent most of the day with a loss, although my portfolio has peeked its head over to profitability.
The frustrating thing was that as GDX and OIH were rising, I had a feeling they would poop out and roll over. However, my fear – – cowardice, to be more direct about it – – to short these markets denied me the opportunity to pad my profits. Conquering fear is a huge part of learning to be a consistently good trader, and with the – shall we say – challenging market of the past several quarters, I have more than my dose of caution.
In any event, the GDX was threatening to break above that green tinted area below, but I felt that was an important level of resistance. Sure enough, GDX flipped right around and started softening. The big question – – a huge question, really – – if whether it'll get soft enough to bust below that magenta area I've also tinted.
As I keep saying, the GDX is very important to watch these days. It has made a steady series of higher highs (circled in red), and as I'm typing this, it is simply closing today's gap. What the bears really need to see is a failure on the part of GDX. Should that happen, the coast is totally clear.