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Direxion Daily Junior Gold Miners Index Bull 2X SharesDirexion Daily Junior Gold Miners Index Bull 2X SharesDirexion Daily Junior Gold Miners Index Bull 2X Shares

Direxion Daily Junior Gold Miners Index Bull 2X Shares

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JNUG trade ideas

Don't Trust Today's Upturn in GoldIn my last post I mentioned that JNUG performs better when it closes above the Hull Moving Average . Today it moved decisively above the Hull, which I'd usually take as a bullish indicator. However, on this occasion, I don't trust it. The price of gold tends to move opposite the market. The market is down today for reasons of seasonality . Today (June 12) is what the Stock Trader's Almanac designates a "bear day"-- a day of the year on which the market has historically declined more than 60% of the time. However, it's an isolated bear day. Seasonality favors an upturn in the market tomorrow (June 13) and Friday (June 14). Friday is a "bull" day-- a day when the market has historically risen more than 60% of the time. There are several more bull days next week. I expect weakness in the price of gold as the market rebounds. Gold also tends to move opposite the dollar. The dollar is showing weakness today, breaking downward through some critical support levels. But in my experience, market movements on isolated bear and bull days can't be trusted for purposes of charting. I usually ignore moves through support or resistance on these days. The dollar may rise back above its supports tomorrow. If you're feeling lucky, you could even try shorting gold by buying the Junior Gold Miners' Bear fund (JDST). I'd only try a one-day short play, however, because even if the dollar does move upward tomorrow (an uncertain prospect), it may soon return to weakness ahead of the Fed meeting. As always, this is just an idea and does not constitute investment advice.
AMEX:JNUG
by ChristopherCarrollSmith
JNUG likely to fall if it closes at 8.47 or belowThe Junior Gold Miner's ETF performs better on average when it closes above the previous day's Hull Moving Average than when it closes below. This relationship is particularly strong in the months of June and December, historically JNUG's strongest months. (Anticipators of gold's historic June strength likely drove gold's bull run on May 30-31.) Today JNUG crossed below its previous day's Hull (8.475), and I give it better than even odds of closing below that level. If it does close at 8.47 or lower, look for a significant drop in the next few trading days. If not, then JNUG may move higher. The JNUG gold miners ETF reacts to the price of gold (XAUUSD), which reacts primarily to the US dollar. The dollar's next moves will be determined by expectations of a Fed rate cut. If investors remain bullish on the likelihood of a Fed rate cut within the next year, expect both gold and JNUG to break out higher. If expectation of a Fed rate cut turns negative (as it seems to be doing), expect the dollar to return to strength and XAUUSD and JNUG to break out downward. With Bullard the only Fed member signaling a rate cut and others saying a rate cut isn't warranted yet, I'd put 60:40 odds on a strong move downward in the next week before upswing on safe haven demand near the end of the month. If you'd like to short JNUG, you can use the JDST ETF. This is just an idea, not trading advice.
AMEX:JNUGShort
by ChristopherCarrollSmith