While remaining bearish based on incomplete sector and macro fundamentals and technicals, I only pressed the short side the other day after making this GDXJ bounce post. GDXJ was do or die and I thought it was worth a shot since, as was noted in the post “Gold stocks (as a sector) are bearish until initial resistance is cleared and then bigger picture bearish until the declining 200 day moving averages are cleared (and held).”
And that was not even including the incomplete fundamental picture.
At that point I added a short against 3x Junior Miner bull JNUG, to go with the existing short against Senior Miner 3x bull NUGT. Today I covered the NUGT short quite profitably and continue to hold short against JNUG.
Don’t get me wrong, NFTRH’s stance has been to leave the sector the hell alone because I am not a day trader and will not pretend to be one, potentially to other peoples’ harm. I am just a risk-o-phobe trying to call the turns in the markets, short and long-term. Traders can do what they wish off of the analysis.
So the NUGT short, which was leveraged against the likes of GDX is covered right at the next support level we have been tracking since way back before the “drop dead gorgeous bull wedge” (that wasn’t) was even a glint in its promoter’s eye. When this thing lost the MA 50’s in May it was cooked, especially after retesting the EMA 50 and failing on a bear flag at the beginning of June. GDX had better bounce here or the decline is going to wipe out those who buy promotions instead of reality.
As for the Junior ETF, it looks much worse as the breakdown continues, but support is well lower. Since my area of interest in buying the washout is in the junior and exploration space, I retained the JNUG short without as much worry about its profitability, which is good now, could get much better or could put a hurt on with the next sector hype operation. It does not matter because barring an outright crash to our most bearish levels for the sector, in which case I’d book a great profit, short positions may well be there to oversee a coming acquisition process, assuming fundamentals look like they will come in line. *
Regardless, those in cash and looking to buy the sector may finally get the chance fairly soon. However, it may come from well below the support levels shown above. Only week-to-week development of the plan will provide answers on that.
* Funda are not nearly all in line, but using the Palladium-Gold ratio as one example, something is beginning to happen on the macro and while the summer can get woogley for bulls and bears (regular stock market bulls and bears, that is), it now seems to be a matter of months before changes will be apparent.