Gold Stocks: 30 Minute Chart Tool In Play
Graceland Updates 4am-7am
Dec 6, 2011
- As I look out my market window this morning, the question "Is natural gas actually going to zero?" comes to mind. If you are brave enough, click this natural gas chart now.
- I'm not sure how any investor can be heavily long a major asset from higher prices and stay sane, while enduring this kind of price action.
- Nobody escapes price destruction on quality assets they own. In this crisis, endurance of severe discomfort is the rule and the norm, not the exception.
- The commercial traders often hold a physical/dealing position on the long side, and short against that position in the futures markets. The retail investor needs to re-think the viability of a long-only strategy, given the ongoing bizarre and surreal price action exhibited across most asset classes.
- I would probably consider checking into the looney bin, if I was carrying a long-only natural gas position, and no cash. Carrying tactical short positions against a larger long position brings emotional gains as well as financial gains.
- It doesn't matter if natural gas is going to $20 from $2.50, if you bought it at $5 and sold out at $2.75. Holding tactical short positions is how you maintain your larger foundational long position.
- With natural gas this morning, I find myself hoping it rises, so my long position makes me large profits, yet I also find myself hoping it falls "a bit more", so I can book off some more profits on my tactical short position. Give some serious thought to contrasting how I feel this morning, with how most long-only investors are feeling.
- Loss-booking and cursing supposed " market manipulators" is not how to endure price destruction. Carrying a tactical short position, and a big wad of cash, should be front and centre on your list of realistic actions. Do whatever it takes to maintain a positive mindset in the market.
- Just because an asset is cheap doesn't mean it can't get cheaper, or stay in the cheap zone for a long time. If you are already past discomfort and into the pain zone, then you probably need to get a short position on your market table.
- Most of you own a lot of individual gold junior stocks, mostly from higher prices than where we are now. Shorting GDXJ, GDX, or NUGT (the triple leveraged version of GDX) is how you manage price destruction on those stocks, and manage time in the " gold stocks gulag". In a real gulag, the prisoners look for tiny games to play where victory can be theirs. You must do the same, in the market.
- You can buy the bear fund DUST, but keep in mind there is substantial slippage involved with most leveraged funds when you hold them from the long side, for time. If you short NUGT, you benefit from the failure of NUGT to properly track the action of GDX over time, and your benefit from that slippage can be substantial.
- Please remember that you do not put on a tactical short position to profit from your prediction of a lower price. You do it to ensure you don't blow out your much bigger long position when a surprise move, not a predicted one, brings severe price destruction to your long side core positions. Few understand, so few will endure, and even fewer will profit.
- A week ago, I told you the technical set-up was in place for a big rally in gold stocks. That rally is underway now.
- GDXJ is acting like a champion here, compared to GDX, but I like the action of both, against the dollar, since they bottomed. Click this powerful looking GDX chart now.
- That's a 30 minute chart, and you can see that after blasting from about $55 to $61, GDX has pulled back to support in the $57.50-$58 area, where I'm a buyer. Notice the beautiful little wedge pattern that could propel GDX right through the pathetic army of dollar bugs trying to defend $61.
- From the lows of about $54.77, GDX rallied about 11%, to a high of about $61.01. From there, GDX declined by about 6%, to about $57.51, which is yesterday's low point. The action is bullish.
- Try to think less about making dollars with gold stocks, and more about beating up on the dollar bugs. The market is a battle, and if you focus on getting more of the world's most powerful assets, when the loss-bookers put them on sale, you will be focused more on destroying your dollar bug opponents as price rises. Wealth building is good. Destroying your opponent is better, whether you want to face that fact or not.
- When you carry a tactical short position, it gives you a degree of control that the average investor does not have. Control is power. Seek power, and destroy your opponent, on the market gridlines. If price rises, you are in control. If price falls, you are in control. Is the market about....you?
- Click this GDXJ chart now. GDXJ has outperformed GDX. From its low of about $26.75, GDXJ rocketed almost 15% to about $30.76, and since then has corrected by only about 4%.
- Both on the upside, and on the downside, GDXJ is "taking it to" GDX, and even more so, to the dollar bugs!
- Congratulations to the many investors in the gold community who are embracing the Dow in this epic battle against the dollar bugs. I'd like to see a new " I refuse to be a dollar bug" wave spread right across the gold community, like a golden wildfire.
- View the Dow as your personal gold stocks friend. I've indicated that a move over 12,250 on the Dow could ignite a gold stocks super-rally. Click this Dow battle chart now to view the fight in progress for the key 12,250 number. One head technical analyst for a major US bank just turned from bear to bull on the Dow. From a liquidity flows standpoint, it's a solidly positive event.
- What I don't think most analysts understand is the truly enormous amount of price action that the Dow, GDX, & GDXJ are discounting, in regards to the European crisis. The declines that occurred are truly miniscule, considering that Europe almost went off the financial map.
- Click this 30 minute Dow chart now. Note the similarity of GDX & GDXJ to the Dow in the basing area, but note also that there has been almost no correction from the highs, despite approaching the 12,250 zone, and that is very bullish technical action. Most of the gold community put "only" about 10,000 times too much hope in the central bank propaganda about saving Europe last week, and now are in financial shock. Stay focused on the " steady as she goes" central bank gold accumulation programs, not propaganda about gold parabolas and pipedreams in the sky. I'm locked and loaded for GDX to rip through the $61 highs, like a chainsaw going through dollar bug butter, and the only question is, are you onside?
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