Gold Price Action, Blows-Up

Trading The Price … Not The Narrative

The narrative and the price don’t agree; at least at this point.

Over and again, we hear it’s ‘dollar destruction’ and ‘hyperinflation’.

Here is a link to one of the latest pontifications on what ‘inflation’ is doing or is going to do.

After watching that, one is so much better informed. Well, at least we know what the bit-players are saying … each reading from their own (pre-approved) script.

Let’s get back to reality and the price action at hand.

We’ll start with this quote from the last update which references shorting the gold miners using JDST (not advice, not a recommendation).

“However, something that can be done is to use that upward bias to position short at the lowest risk possible.”

That’s exactly what was done during this (past) session; let’s start first with the big picture.

Junior Miners GDXJ, Weekly

As a reminder, and for those who may be new, we’re looking for a particular price pattern that has been shown to repeat over time:

Wyckoff: Spring-to-Up-Thrust

Note in the CAT, example in the link above, price-action up-thrusted and then came right back down to support without any kind of an upward test.

Sometimes, it happens that way.

What’s not known of course, is if GDXJ will respond the same way.

Junior Miners GDXJ, Daily

The chart above is a close-up of the action.

The next chart is leveraged inverse fund JDST. It shows the initial entry of what is labeled trade, JDST-22-02 (not advice, not a recommendation).

Trade entry was just as JDST, price had reached its daily low extreme and was backing off higher (GDXJ, lower); right around 1:14 p.m., EST.

Note the tightness of the stop; just 0.24-points.

Summary

Tomorrow’s action could hit the stop, blow (gap) through the stop or continue upward.

It’s unknown.

What we’ll get for sure, is another data point on what’s really going on with the miners.

Stay Tuned

Charts by StockCharts

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

Set-Ups, that Repeat

Late Session

Wyckoff: ‘Spring to Up-Thrust’

Years ago, while reading one of David Weis’ daily updates, he made a comment to the effect:

‘I can’t count how many times I’ve seen a spring, go straight into an up-thrust’.

His observation stuck with me through the years. Being the engineering type, I naturally wanted to know why.

Why does that market observed phenomenon occur?

Pursuing the question from a data perspective, it became clear that finding an answer, would be a never-ending quest.

I abandoned the ‘data’ idea; but the question lingered.

During that time, observation of the markets proved Weis’ point. Some markets tend to go straight from ‘spring to up-thrust.’

One example that’s taking place now, is CAT:

Another example in the potential set-up phase is LOW:

The reason for the phenomenon remains open. Obviously, the market’s going to go where there are orders.

It’s likely, under the right price action and psychological conditions, when support is penetrated enough (amateur) participants sell and then sell short.

Those undisciplined traders continue to move their stops higher (against their trade) as the the market moves higher; ultimately taking them out at the up-thrust top.

How do I know this? Because that’s exactly what I used to do.

Stay Tuned

Charts by StockCharts

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.