We expect the gold miners to stall and consolidate for a few days. $38.50-$39 is tough resistance and will most likely require 2 attempts at that level to penetrate. Expect a pullback most likely Thursday through Tuesday of next week. Do not become a serial trader and try to trade every wiggle of a large trending move. You may get lucky once going in and out but will fail the next 5 times. At HFZ, when we are in a medium term trending position we trade around our position by keep 90% in and trading a maximum of 10%. Day to day there is too much noise in the market to have a consistent crystal ball. Keep your eye on mid-June before we consider closing our NUGT position. Higher prices are coming.
The junior miners today showed major outperformance of the senior miners. After the next pullback we may shift to JNUG. You need not worry they move together and their gains are comparable most of the time. One will not rally without the other. $52 is the analogous price to GDX $32. A move through it will cause a quick thrust to $60.
A note to those trading Silver which has been moving up: We expect a top in Silver the first few days of June with a possible upside target of $18.60 Spot or $17.50 SLV, the ETF. A sell-off into late June will be our target buy zone. This may change if Silver can break through $18.50. Make no mistake once it does the gains witnessed will be far greater than GLD, GDX or GDXJ. We will watch closely.
A future trade target for us June 2nd. When fear subsides and the market goes sideways or higher, SVXY climbs.
The VIX goes up when fear spikes and down when fear subsides. If there is a gentle slow decline in the stock market the VIX is capable of staying flat. Swift, sharp moves down make the VIX index escalate. Eventually, fear always subsides in every sell-off. Shorting the vix is eventual money in the bank. There are not too many trades you can say that about. Using an inverse ETF is best, limiting the downside risk of a margin call if you short the VIX directly. Sometimes the market stays range bound and generates a sideways coiling action and does not recover losses for weeks. That kind of action will push SVXY higher. We expect a spike in the VIX into June 2nd as the average investor thinks we are headed toward a double bottom in the DOW and a retest of 18,200. Fear will be high and SVXY will be cheap.
As far as market analysis is concerned, please refer to last night's chart. Our trajectory is playing out as expected. We got the first leg of our sell-off. Look for more weakness into Thursday. A short term low mid day Thursday may materialize with a happy Memorial Day rally on Friday. A large drop will be seen over the weekend into Tuesday for a gap down opening and recovery. We may short Friday’s close with SPXS.
HFZ