Professor’s Comments July 26, 2019

Posted by OMS  at July 26th, 2019

I want to take some time this morning to explain the Model’s purchase of NUGT yesterday.  I believe its one of the more interesting trades on the board.

Here’s why:  If you pull up a 30 min chart of NUGT, you will see that it touched just over 36 on 19 July.  The pattern suggests that this high was the completion of Wave 1 up.  After reaching that high, the ETF pulled back in a series of a-b-c moves, with ‘a’ down occurring on Tuesday 23 July, ‘b’ up on Wednesday 7/24 and then yesterday’s decline for part or all of wave ‘c’ down of Wave 2 down near 32.57.  So, if the 8 points of the Wave 1 up ‘stick’ are added to yesterday’s low, the projected target becomes 40.57.  BTW, the projected target could be even higher. That’s because it’s also possible that Wave 1 up began on 1 July at the 24.14 level. The early July low gives us a 12 point ‘stick’ which puts the target closer to the 44.5 level. 

So, with NUGT trading near 33, once Wave 2 completes, it’s possible that NUGT could see a move of either 8 or 12 points.  It’s why NUGT was purchased as a short-term trade.

Students should watch for the CCI on the 30 min bars of NUGT to turn positive.  A positive turn would suggest that Wave 3 up is starting. Because NUGT is a 3X leveraged ETF, students might want to consider stepping into the trade using the CCI on the 30s and 60s as triggers.

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BTW, The Tide turned negative after yesterday’s session. The market timing indicator for the Dow turned Neutral.

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Not sure of the terminology we use? Check out these articles

The Hockey Stick Pattern
The Creation of Waves and Trends
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