This is a chart of a stock that should be bought. Period. It's name and symbol is far less important than this price pattern. First and foremost is the fact that it has appreciated 50% since the first week of September. That is an eye opener and as a trend follower it has gotten my attention. Retracements in a bear market just don't act like this. That 50% gain isn't even at a steep angle. Imagine the return if it really ran up. This is an asset based security, and the underlying asset has a tendency to run and run fast. That asset is up about 2.5% during the past six weeks while the stock above rose 50%. Although this is an 180 minute chart (3-hours), the pattern is what matters. A fractal of this pattern runs through the daily chart as well, which we will get to below. NUGT The investment seeks daily investment results, before fees and expenses, of 300% of the daily performance of the NYSE Arca Gold Miners Index. NUGT is highly leveraged to the gold miners sector, which is highly correlated and at times, leads the price of gold. During the same time frame when NUGT was up 50%, the unleveraged gold miners (GDX) rose about 18%, while gold itself rose about 4%. NUGT Daily Bar Chart NUGT 180 Minute Chart w/Trading System Buy Signals When the daily bars generate the first buy signal of the new uptrend we will add NUGT call options to our trading portfolio and I'll be monitoring GLD, GDX as well as NUGT for that first signal. Since these are shares and not options, based upon the chart pattern above NUGT shares can be bought now. We will wait for an official "Buy" before going after the options. In fact with so much inherent leverage built into the stock itself, it's reasonable to skip the options altogether because as we saw in 2016 the shares themselves provide substantial returns without the risks associated with the options. In the first six months of 2016 gold ran up about 30%. During that run-up, NUGT went from roughly $20 to slightly above $140. That is a return of 900% - a return on a stock, not an option, and that is a Buy & Hold return, not a trading return. The pattern in the first chart above is suggesting that the same kind of run is in its early stages now. Buying the shares I am willing to risk about 30% to make well into the triple digits on any decent gold rally. NUGT Jan-Aug 2016 A Long-Term Call Strategy: The five-month ATM call (Mar $16.00 costs about $3.00. If NUGT can run just 100% from current levels, remember it ran 900% in the first half of 2016, it will be at $32 and that call would be worth at least $16, for a gain of over 400%. If NUGT's share price runs up 900% as it did in 2016, those calls should be worth a Tesla. In Summary Gold is currently washed out and a prime candidate for at the minimum a moderate dead cat bounce, and more than likely an intermediate term rally. It is about $60 off of its August lows. NUGT offers huge returns, whether buying the NUGT shares, the options, or some combination thereof, and that's without factoring in a few timely System Buy Signals along the way. The assumption with this play is that gold and gold miners are due for a rally in the months ahead and NUGT is positioned to approach, match, or maybe even exceed its performance of the first half of 2016. My take: Risk about 30% to make 900%. SYSTEM TRADES (Including October Expirations) There are no new system trades for Monday. The active positions are evenly split between calls and puts. With still four weeks left until November expiration a lot can happen. From scanning my charts multiple times each day I continue to see deteriorating price patterns virtually across the board and expect that most new signals will be to the downside. At its lows on Friday, the Dow has erased virtually all of Tuesday's 550 point rally, no big surprise here.
