Nascent GDX Reversal, Gathering Steam

Packed in like sardines, the gold bulls just keep on coming.

Once again, the latest from ZeroHedge:

Von Greyerz: Gold-O-Mania Is Coming!

The author is “convinced” gold is going to end the year higher than it is now.

Well, it could.

Does that mean the miners are going to end higher?

Gold Miners, GDX:

A marked up chart of leveraged inverse fund DUST (-2X GDX), is below.

Chart is on the 4-Hour scale:

We can see a potential trend.

When that area is expanded with contact points (below), it becomes even more convincing.

The actual metal, gold, may indeed rise over the coming months.

However, today, GLD is retracing to support. What happens now, is the key.

Bounce and continue (higher), or bounce and fail.

Positioning:

The short position via DUST (not advice, not a recommendation) was opened at the danger point when the direction of price action was unknown.

From the post on November 10th:

“As of this morning, we’re already positioned short this sector via DUST (not advice, not a recommendation).”

DUST has since moved higher (GDX, lower) and the trade is well in the green.

That means one can watch the battle take place at support for GLD, GDX and resistance for DUST from a (somewhat relaxed) position of profit.

Summary:

The final outcome of this short-trade is of course, unknown.

However, one of the objectives of these posts is to document the level of research and preparation involved for a ‘position’ trade.

Going short has been two months in the making.

From the initial ‘GLD Target‘ post to now, we’ve seen manipulation of GLD, GDX price action; making it look like a breakout was imminent.

That action was coupled with non-stop financial press herding of the easily influenced to the bull side.

How can it not be coordinated? Remember this post?

So, it looks like the bull trap has been set.

This trade could still fall apart for some unknown reason.

If it looks like the bulls are somehow re-gaining control, it will show up in the price action and we’ll exit accordingly (not advice, not a recommendation).

Stay Tuned

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279