GDX next Buy Signal

[Pascal]

As of now, the GDX Model is in a weak short signal.
Last Friday, the MF closed above the Oversold level. This means that no Oversold buy signal will be issued today.
To issue such a signal, we first need to close below the OS level and then cross above it in subsequent days.

With the continued selling in the gold futures, there will probably be a large opening down-gap in GDX, which might be bought, except if we have a margin-call forced selling event.

I believe that it is safer to let this situation calm down. Even day trades will be very difficult: a large down gap that is not reversed by 10:00 tells us that we could have a down day. Hence, shorting if we have an early morning reversal occurring on low volume (negative MF divergence) is a technical possibility. However, gold itself is extremely oversold and a bounce in gold price will pull the miners, which makes shorting negative divergences dangerous.

However I would not be a bottom fisher of a large down-gap here, as statistic evidence shows that another down day is probable.

A "wait and see" position is probably a safe bet for the day.



Pascal

18002

[Pascal]

The GDX Model has confirmed the move to "Cash Oversold". This means that the probability that we retrace the distance to the oversold level before the close is low.

If however we retrace that distance today, the model will stay in cash, as only one signal change is allowed per day.

Most probably, we will close lower than the Oversold level today and if buyers are serious, then we might bounce tomorrow and hence issue a Buy Oversold signal tomorrow.



Pascal

18004

[Pascal]

There is a clear bounce shaping up in the miners.
It is interesting to see that silver attracts more bottom buyers than gold.
Therefore, I believe that SLW is the better "bounce play" as of now.
Keep positions small.


Pascal


180051800618007

[Pascal]

The GDX RT Model closed above its Oversold level, but issued a "cash oversold" confirmed signal during the day.
This means that at the open, the model will issue a non-confirmed Buy signal. This signal will be confirmed as soon as the confidence that the MF will not revert back below the OS level before the end of the day reaches 80%.

The GDX EOD model will stay in a short position.



Pascal

18010

[Pascal]

Since GDX will open on a 3% gap-up, I would like to remind the small study that I conducted a few days ago:

http://www.effectivevolume.com/showthread.php?6067-GDX-Model-day-trading-information

This shows that when at 10:00 AM GDX was up more than 1.4% from the last close, then from 10:00, GDX would lose on average 0.7%

Please also note that the Short setting for GDX are strong today (These settings are updated on the GDX RT page when the RT model starts at 9:30, but this information is already updated on the Models' main page.)

My day-trading plan is to short negative divergences during the day today. I do not plan to carry a short position overnight.



Pascal

[Pascal]

The GDX Model could issue a buy signal today.
Everybody knows that this could simply be a false oversold buy signal and that all depends on the price of gold itself, which I believe should clear the psychological resistance of $1400 for the Miners' buy signal to have some chances to produce some profit.

As I have a discretionary short TNA and long SDS position, a long GDX would meet my goal of keeping a general neutral portfolio to match the 20DMF.



Pascal

PS: While I was writing this message, the MF moved up...

1803218033

[Pascal]

On a longer time scale, selling seems to be drying up here.
At least, we have the beginning of a basing pattern.


Pascal


18037

[Pascal]

With gold under pressure, the miners could not push past the Oversold level and hence, the GDX model will stay in cash.

The 20DMF model seems more likely to enter a short position by the close. The signal confidence level is now 70%. The short signal is confirmed with an 80% confidence level that it will not reverse above the short limit by the close.



Pascal