6/5/17:

Closed Trades: GDX Short of November 2016.

 

Back in early November 2016, a Wyckoff up‑thrust was identified along with a test of that up‑thrust.

 

A significant amount of technical data was offered to support the assessment the gold miners were about to experience a rapid and significant decline.

 

The technical data is still available (called out in real-time, as it happened) and can be found in the Sector Archive (scroll to November 2016, 4th - 9th updates). Not provided at the time, was exactly how this trading entity profited from the opportunity. 

 

Our business model is to provide access (to analysis and training) and not advice:  Therefore, potential trading actions were not released.

 

Now that sufficient time has passed, trading actions and information can be brought out and discussed.  The 15-min chart of GDX (above) reveals details of the trading activity.

 

With the understanding that entry and exit perfection is not always possible, several positions (strike and expiration dates) were anticipated.  The 11/11, put was set to expire in just three days after entry and the 11/18, 12/09, puts allowed additional time if the trade continued on lower (which it did) in the following week.

 

We can see that at the open, price action was moving fast … declining swiftly in the first 30-60 minutes.

 

Initial entries were made during the second 15-min bar as shown.  Price action immediately declined and the position was in the green.

 

Then, after the first hour, we had choppy counter action leading up to the intra-day high and the next entry point.  At this time, the original position was showing a slight loss but within money management parameters.

 

Recognizing that price action was counter-trending and not in a new impulsive move higher, a second position was initiated.

 

The criteria then became; the trade must be in the green (all positions) by the close.  There’s no problem with being wrong.  It’s being wrong and staying wrong that’s the problem.

 

Price action reversed from that point and never came back for the duration of the trade.

 

The rest is self-explanatory.  During the next session the 11/11, put was exited. There was sufficient profit, the entire remaining position could be a total loss and the account would still show a gain.

 

The decline continued on into Friday, the 11th and closed near the low.  Using the empirical knowledge that if price action closes near the low on a Friday, there’s likely to be follow‑through on the coming Monday, positions were maintained.

 

Decline on Monday is exactly what happened and all positions were closed early in the session.

 

After the exit, we can see that buoyancy came back into the market.  The ensuing counter-trend price action would have begun to significantly erode profits had the puts been maintained.

 

Individual gains are listed in the table on the chart (along with some SLW puts) with the overall profit at 258% as shown.