I’ve been really nervous over the past two weeks.
You see, I sold out of my gold stock trading positions a couple of weeks ago. Ever since then, I've been anxiously looking for a spot at which to get back into the sector.
I like owning gold stocks. I think the sector will be much higher many months from now. And I'm uncomfortable not having any gold positions in my trading portfolio.
Selling out two weeks ago was certainly the right call. GDX is down about 8% since then. Now I'm trying to figure out the best spot at which to get back into the sector. Here's what I'm looking at…
Take a look at this 60-minute chart of GDX…
Over the past two weeks, GDX has been making a series of lower highs and lower lows. During that time, the MACD momentum indicator has also been declining. And, as GDX dropped to lower lows, the MACD indicator hit lower lows as well. This action confirms the downtrend and it usually indicates that any bounce will be temporary.
So, it looks to me like there's still a bit more room for the gold sector to decline from here. Perhaps GDX will make another lower low and decline to the blue support line on the chart at about $22.70.
But, here's the good thing…
The MACD has bounced back high enough now that if GDX makes a lower low soon, then the MACD indicator will likely make a higher low. This “positive divergence” often occurs before a meaningful reversal. At the very least, it should lead to a tradable bounce in gold stocks.
Since this is a 60-minute chart – where patterns tend to play out within 3-5 days – there's a chance traders may get a shot at buying back into the gold sector later this week, or early next week.
Best regards and good trading,
Jeff Clark
P.S. My gold stock analyses are only a small part of how I provide my Delta Report subscribers with huge, overnight gains.
Recently, I unveiled my earnings trading algorithm to my readers. It’s a system that predicts – with 90.2% accuracy – winning trades that emerge from the fast stock action of quarterly earnings reports.
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Reader Mailbag
If you’d like to have your insight, question, or comment featured in our Reader Mailbag, send an email right here.
To lead today’s mailbag, some kind comments from happy Delta Report subscribers…
XLK – another great call by you! Decided to sell whole position – 15 puts – at $1.46. Reason is, the end of the quarter is this Friday and if the past is any indication there might be games and markups. It was such a good trade that I do not want to give any back.
Will I miss out on future declines in the ETF? Perhaps, but good trades are hard to come by.
– Jeff
Thank you very much for everything – your time, focus, open sharing, direction, wonderful help, and education! Much appreciated!
– Katherine
I REALLY value the education and training you provide… and of course the profits!
– Geoff
Thank you for your articles, they are making me a much better investor.
– P.
I keep a journal of all your especially helpful and educational comments from all your Delta Direct write-ups. I'm a busy mom, so this allows me to go back and quickly hone in on and review what's going on and how you are getting there.
– Clarissa
Jeff, I've been with you for about 3 months now and I think you're awesome. Keep up the excellent work that you are doing.
– Steve
Also, some readers offered their advice on filling option orders…
Hi Jeff, I read your “mailbag” comments [from Delta Direct] just a few moments ago. Yesterday, when you made the ORCL put recommendation, I also saw that the puts were trading out of range. However, I simply put a limit order in and my order was filled at $1.58 – a little less than your buy-up-to price. It's possible that some folks don't understand how to place limit orders. By the way, I closed that trade out at $3!
– Toby
Jeff, as you said recently regarding the ORCL put, we should not necessarily wait until we hear from you if the price spikes first thing in the morning. For that trade, the price did spike first thing that morning and I sold the puts that I bought for $1.60 for $3.18.
If I could do a trade like that every day, I might be able to retire. Thanks!
– Michael
I just finished reading the comments you posted about problems people are having getting filled when prices move above or below your “buy up to” or “not below” prices. My answer to that situation is simple: I enter a “good for the day” limit order within your stated price range and then let it go. Almost always the price comes back into range and gets filled sometime that day.
If it doesn’t get filled that day, I'll try it again the next. I rarely don't get filled, and when I do get filled it's always at my price. If it gets filled, great. If it doesn't, that trade wasn't meant to be for me. That's a rather simple way for me to never overpay or under-receive. It works great. It seems to me that if more of us did that, the price would be less likely to go out of range so soon after your posts. Thank you for all the effort you put into this for all of us.
– Rickard
You were clear that the Oracle puts were a very short-term earnings-based trade. My expectation was to get out of the position ASAP the next morning. Well done.
– Bryant
One reader, returning home after evacuating due to Hurricane Irma, was pleased about several developments that took place in her absence…
Back from evacuation from Hurricane Irma, catching up on posts. Just read post on LEAPs. I didn't know I could sell covered calls against LEAPs. I will be calling TD Ameritrade to see if I can do this in my ROTH IRA.
Also relieved that you added a portfolio for positions from Delta Direct, as I also lose track of some recommendations when I have to evacuate for hurricanes, etc.
– Sandra
And finally, two readers offer differing opinions on last Monday’s essay, “A Biblical Trading Lesson”…
Bravo! Great advice Jeff! I spent a lot of time looking back at what could have been. Dumb, dumb, dumb! A complete time-wasting practice. Thank you for the great tutorials.
– David
Your remarks about salt, blood pressure, and Lot’s wife were ill-informed and perpetuate public health and physiological myths that have had dangerous impacts on American (and worldwide) health.
– Dick