Jan
27
2015

Current Thoughts 1-27-2015 Midday Report – JNUG and JDST Trades

By: Doug Eberhardt Category: Current Thoughts on Gold and Silver Tags: , , ,
When I write my Current Thoughts I mention the words “higher high” in trading the various ETFs. In explaining this pull up a chart of JNUG which you can find here: http://finance.yahoo.com/q?s=JNUG
Click on the 1 day chart for reference (as shown below).
The following analysis is based on price action only. No Elliott Wave analysis. No fibonacci, RSI, etc. gobblygook. One can successfully trade these triple leveraged ETFs based on price action and some simple rules.
JNUG
The higher high came twice on JNUG, once at $39 and again at 9:47am EST or again at 10:33am EST at $39.80. Both could have been good short term trades where one could have locked in profit.
Technically you had one more higher high but it occurred during lunch time which is never a great time to trade.
If you look at the 3 month chart on JNUG we had 3 higher lows which is bullish. If indeed we are bullish (and gold would have to confirm) then JNUG could go to 45.55. A break of 46 and it’s off to the races to possibly 56.
JNUG 3 MO
On the flip side I wouldn’t even touch JDST today till a break of 7.66. See chart here: http://finance.yahoo.com/q?s=jdst&ql=1  A break of 8.07 and it would be a nice trade to 8.50 possibly 9.00. A break over 9.55 and 13.92 might be next stop.
JDST
Some of these would be swing trades, obviously. But look for the trend and only trade a reversal if gold agrees (and keep in mind yesterday was an enigma and not the norm where we saw gold down and the mining ETFs up nicely).
What many don’t realize is these two ETFs are not opposites of each other and should not be held for too long. JNUG is down 83.79% the last year and JDST is down 74.26%. Why would anyone in their right mind put money into these? The answer is, if you are on the right side of the trade, you can earn 10% in one day. But if you guess wrong, you can lose 10% or more in one day. That’s why you keep stops!
JNUG is up 9.88% today and JDST down 10.14%. UGAZ up 6.28% and UWTI 5.84%, two that I mentioned I like yesterday.
Dollar was down big earlier today with market. Fear trade was on I think and gold benefited. But the stock market is coming back down less than 200 points at present.
From this point of time in trading today I would look at the above prices for the right trade based on the trend and with an eye on gold prices as well as the potential for reversals. If a trade goes to a higher high and then reverses below where you got in, a stop should be in place so as to not let the trade turn into big losses. On the flip side, move your stops up on a profitable trade and don’t marry these ETFs for too long. TAKE PROFIT! Another trade is just around the corner.

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About Doug Eberhardt

Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534

Disclosure:

Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.

All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.