30-JUN-2013 Week-end post - Part I.
I don't know what to say.. Many thanks for all of my subscribers. It's a great feeling to have a global community and help people all around the world. Let me share the feeling I have seeing the statistics of the last few weeks. I hope you feel something similar...
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Having readers from 79 countries...thanks a lot for your interest! I will try to do my best in order to serve you.
Last week we had something surprising. Miners made a historical rally in prices and...and for Friday in volumes. Volatility became extreme for miners. We received a 4h bull signal a day before the actual price manifestation and they wuickly rolled over to 1D timeframe. Those signals had no confirmation on 2D volume indicators, and the y still have no confirmations. We had some pre-signals on volume charts. As you know, 2D charts have a kind of lag makes it hard to nail the bottom and I use my harmonics system which is a non-volume based trading system.
As I'm repeating since last September, miners are the hardest assets I ever seen in my trading career. First of all they lead the PM sector, so hard to predict, secondly they are double correlated to SPX and gold and only insiders know which has stronger impact on a given day. On top of these factors, miners are traded by smart and highly intelligent institutional traders having zero, again ZERO moral and do everything in order to kill other stakeholders. Miners are only for the best and most experienced traders have steel nerves. I showed the tricks and manipulations they make with miners: we could follow these guys when they made days up in order to sell on strength and we could see traces of shadow buying even in the middle of recent collapse of miners.
Chart above is HUI 2Df
Miners 2D HUI chart shows a still active MVO bear surge. Friday practiced apretty strong damage on this bear surge and we can see a peak of MVO. Rise is from -30 to -8. As long as MVO bear surge is on, there is no place to buy. Our existing stakes will carry recent rises and we will try to buy when MFI is above level of 50 and MVO bear surge is over. As you can see on my Friday, Beofre the bell post I ordered high odds for a breakout. My best bet was an after week-end gold futures rise-triggered large rally for miners, however they delivered a big surprise last Friday with the 7.76% of rally.
Last cande on 2D chart became a decisive BOW day but HA candle is still negative. Also, SBV still has a steady zero buying volume line. We have an important, McClellan bear/bull switch but no other indicators signal a confirmation. Our task is to sit and wait for better volume signals.
If you check my post last Friday ( http://smartvolume.wordpress.com/2013/06/28/28-jun-2013-before-the-bell ), there is a HUI thinkorswim chart and, according to the current volume setup I still estimate HUI's characteristics as detailed there for the next 5-8 trading days. The only exception is an MVO bear/bull switch which will result a sharp, V-hape rise in miners. ( http://smartvolume.files.wordpress.com/2013/06/2013-06-28_hui1dts.jpg )
What I usually do is checking underlying volume charts for indexes/commodities have 2x and 3x bull/bear ETFs. Their volumes are low usually, therefore volume indicators deliver less reliability, however, these charts are pretty good and still deliver us information about the given index/commodity.
Chart above is NUGT 2D.
First of all, NUGT had a 2.5-3M/2day average volume between 12-May and 13-Feb. Then something happened: we detected the inflow of smart money in early march which started to intensify in April. I warned my subscribers about giant forces came and eat each-others that time and suggested the best strategy to wait and watch for this period for leveraged traders. (Regarding to my personal trades, I triggered a gap-close trade on 20-jun and held my nugt position through the recent dive in a hope of that gap close and I will be happy to throw those stakes @7.7 that will make me 8-12% of gain in 12 days and I'm still happy with that) Anyway, back to the NUGT 2D volume chart please observe the effect of huge volume rise for the last 2 months. Giants are with us and they took huge bullish positions while masses were in panic. We followed their footsteps, we knew their manipulation in advance, but their war made large damage and I'm sure there were plenty of funds suffered large loss in this, devastating period. We were old turkeys and made some attempts to enter, but mainly were sitting on sideways and watched the show. Finally average volume of NUGT rose to 39M/2D. This is an 1560% of change in average volumes. Last Thursday+Friday produced a giant, 77M volume. This is a 3000% change compared to an average 2D period in FEB-2013.
So, there were thousands and thousands of smarts and smalls suffered huge losses in the last 2-3 months and we could mostly avoid these, hectic days. These volumes signal a huge surge and signal something truly unbelievable rise once the bottom is reached. However, it also suggests that smartest institutions own the majority of miner stakes now and they will do everything in order to throw late-entry institutions and smalls down and they will do their tricks in order to pull the money out of each-others pocket. Tricks and manipulative actions will be performed and therefore NUGT will be more volatile than ever. It easily means a 15%+ day followed by a 10%- day and then, suddenly a 25-30%+ day again, just to have a -12% next day. Smalls will bet after large days, they will lose their money in an hour or two, then, when they are out and leak their injuries, will see a 15% day up next day will blow their minds.
And, then they come back and will buy, but prices just go down for the next 2 days, finally they will suffer 20-30% of their account in a week.
Protection against this is an accepting a role of follower and use a daytrading instrument -nugt- as a mini-futures with practice of a futures trader: don't step in front of daytraders and their algos: use larger timeframes and buy and hold for a few weeks. Also accept the nature of levereged trading: redundancy, meaning never try to catch the bottom, neither the top. If NUGT will rise for instance 80% in 2 months (it can do that !!!) be happy catching 30% and don't mind the remaining. Believe me, you will be happy to have 30%+ in 2 months!!!
Our VTA and harmonics system will help us to identify whether we are in a bull, harmonics are goot to show the bottom and volume studies work pretty well for detecting the top. (what is hard is to detect long-term sideways move in advance, but volume versus price manifestation can help us at least identifying those periods.
Back to NUGT 2D chart please observe the MVO bear surge and 100% selling volume versus 0% buying volume. There is no reason to buy NUGT just now. Again, I warn you about volatility expected for the next 4-6 months.
Chart above is DUST 2D
First of all, please observe the low volumes compared to NUGT.Average volume for NUGT was 2.5-3/bar for NUGT and same period carried .5M/bar for bears. Shorting PMs is extremely risky and as you can see, there was lack of interest in that activity compared to the bull side. We have an important signal on DUST side: both SBV flows lost their values, also MFI turned back from extremely overbought status: institutional bears made a large pull-back on their short positions for the last candle.
DUST holders should cut their positions dramatically or exit asap.
Chart above is gold 2Df
We have a strong BOW day for gold. As you can see, there is no other signal for gold's bottoming, even that MVO bear surge is still on. It's better to wait with gold. If everything goes well, miners took the leadership in the PM complex and we can use them as weather frogs for gold. If that is true, we will see some, dream rise next week. My best bet is still to see an overnight rise this Sunday will lock smalls out of the initial rise of gold. No problem at all, MFI 50 will help to identify a pretty safe entry.
This post was the first part of the week-end post. It's Monday here. I will wake up early tomorrow and will do the rest before the Bell on Monday.
Quick hints: Dollar's bull MVO surge is still on, we have an MVO bear/bull switch on RUA 1D timeframe which orders high odds for stocks to recover, oil is still in a fake bear cycle with a steady zero buying volume on SBV.
Trading update: hold existing stakes
Personal trade: as I told you early morning Friday: I will buy nugt any time, and I will let you know that event in a trading update post.
Office memo: I will issue the password for July now, in a separate post.
Good luck you all!!
(C) 2004-2012 Deric O. Cadora and Atavia, Inc.
Futures and options trading is risky and not suitable for all individuals.