Ideas To Share

Since calling the lows in NATGAS recently,  it has run straight up. I was asked if I had any idea what may happen next.  Lets take a look at this and a few other ideas for the last trading day of 2015.

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Review: This was NATGAS at the lows. I thought we could buy a pullback, possibly on a dip at the 20sma.

The short covering was too strong. NATGAS went straight up to almost $2.40!.  Nice move.  I pointed out the 50sma as a possible support, and it held yesterday, but let me share 1 more idea.

  NATGAS – Lets be honest, I have about 12 different ideas of what ‘could’ happen next, and it was such a strong move, we could just pause briefly and then keep going higher.  Using a Fib measurement makes it a bit more calculated if we do get a pause or pullback here.  So far the 50sma did hold as I mentioned, and price could ride along the 50sma until the 10sma catches up (Yesterdays chart shown above).

  If the 50sma gives way, you can watch the 38% , 50% , & 61.8% retracement levels for buying opportunities. As time goes on take note of where the 10sma is in relation to these levels too for added support.   (Trading UGAZ in this manner can be difficult – be mindful of your ‘fear’ levels in those trades.  I cannot help everyone manage UGAZ positions just because it went against them. Have a plan, start small).

Gold – Did you read the comments section yesterday?  I was told that GOLD was at the bottom of the trend line and some were very concerned about Golds drop.  Gold has not hit the lower trend line, and it still may do that  ( $1050 ish).    I pointed out that there was still room to drop inside of that triangle, and look at this chart.   I think that Gold could drop another $10 today and be fine.  Gold could also stay here for a week and remain in a triangle.  

GDX – On Dec 28 I pointed out that GDX could still be in that first daily cycle .  I estimated a day 30 low looking like this.  That would involve a further drop. Again, watch position size and are you trading NUGT or JNUG?  Those moves are exaggerated, positions should be small at lows.   Buying SA,NG, or other Miners with improving chart set ups has been paying off better than buying  NUGT.

GDX  DEC 2014- JAN 2015.  The lows are put in with a swing, and then we very often get a dip back down to lows that  shakes people out.   In the case below, count 10 candles after the lows and where is price? The next time price broke above the day 3 price was on day 11 ( Jan 2, after a gap down open first).

GDX NOW –  Scary move yesterday?  This looks totally normal to me when I compare it to so many other lows. It could drop further and still be fine,  but what if you jumped into NUGT expecting an immediate break out days ago?  Your trade is not playing out, you must decide what you expected and how to handle the trade going against you.  It is a 3xETF,  expect 3x the drop.

  Now…  COULD this break down?  Yes, of course, but as of yesterday we still can see the  GDX Lows of Sept 11, higher lows of Nov 18, higher lows of Dec 17, and we are still above Dec 17 lows.   Gold and Silver both broke sharply down to new lows in Nov & Dec and this is what Miners did as Gold broke down.   All I can say is so far, so good.    If someone writes to me and says ,  “Miners look very scary, what do you think?”  I look at everything involved and say,  “I haven’t seen Miners looking this good in this environment in a long time.”  Different eyes see different things.

   So before we take a trade,  we have our parameters in mind. 

1.  Are you going to ‘stop out’ with a drop below the Dec 17 lows and try again if it then takes off higher in the new year?  Thats a plan. Those 2nd daily cycle runs higher usually have nice %-Gains.

2. Are you going to hold on to your position and see if SEPT 11 lows hold, because you simply have a couple of small positions in SA, RIC,  and NG and they look great so far?  That’s a plan too. 

3.  Are you heavily into NUGT and cant take another dip, because you bought thinking that GDX  was ready to break out immediately?   Thats a plan too, but that isnt working out as expected, so now what?   It’s your trade,  what is your plan?  Get out & clear your head? Thats an idea.  That is called ” My trade went against me and didnt break out as expected, so I am selling to regroup.”

 4. Some people start very small and even “buy the dips”,  as long as circumstances permit.  Maybe that’s not your plan going into a new year, but ‘buy the dips’ is a great idea at times, as long as the lows aren’t taken out.   We trade within certain parameters. 

One last thought,  A look at the dollar.

This still looks like a double top.  In fact, the second top looks similar to the first one before it fell apart.  Notice, however, that the $USD  did have one last POP higher in April.   We may or may not get that next.  If we were to get that now, Gold could have 1 final drop.  Miners may not drop that much with Gold, since they didn’t drop on Golds last drop to new lows.  At this point, I do not expect that big of a drop with GOLD ,  especially with COT levels as they are, but anything can happen in trading, and shake outs happen a lot.  We trade the ‘probabilities’, not ‘all possibilities’. 

  I am not expecting Gold to break recent lows, and the C.O.T. remains bullish with Smart Money positioned for higher prices soon.   I am still watching that Triangle pattern as a possible formation.  Going into a new year, today is the last day for you to decide how you want to be positioned on Jan 4, 2016.  Cash is a safe position,  no gain no losses.   I will not be around to answer questions today,  I will be on the road for most of the day,  starting now.  Have a good final trading day of the year and if you are going to be out tonight, be safe!  See you in the weekend report.  🙂

~ALEX

Gold has been dropping for the last couple of days, and yet we still see these types of  moves in BAA and MGN, etc.    MGN just doubled.  Interesting.