William wrote me, asking, “If you had no position in NUGT and were looking for a good entry, what signs would you look for? I definitely believe that gold will be on the rise.” I replied that it should be acting and responding very similarly with what I am doing to time the metals and the miners I already follow.
Well, I looked at NUGT specifically, and all I can say is: WOW! Because it was created to move 3 times the rate of the metals price each day, it is clearly for traders only, and not for investors. It is for trying to profit on short-period moves, and not for holding through long-term trends. The volatility would likely knock anyone out of it quickly, as its price swings are magnified so wildly.
Yes, it moves precisely as I read the metals’ and the miners’ charts, but how one could get aboard, and stay with it… strikes me as more like an 8 second bull ride!
All that said, here’s what I would do, William: In a price chart, I think I’d use a combination of some moving averages, and maybe play with them a bit. Start with, say, an 8-day and a 15-day. Move each around a bit to see if you can’t get them to generate easily recognized signals. I thought 8 and 15 worked pretty well. You could change them up with an exponential variety, too. Add 1 or 2 overbought/oversold type indicators, but never more than 3. They might be a stochastic, maybe RSI, etc. But any good trading system can be created with a couple of moving averages, and never more than 3 of the overbought/ oversold type of oscillators.
I hope that helps. I’m not a trader at heart, but an investor. I want to find a newly emerging bull market in some major asset class, like the metals have recently done, and I want to stay in them for as long as I see a recognizable Bull Market. The metals are in a bull… even today’s share sell-off was not a threat to the bull, as they did so on no more volume than average. This tends to confirm that the bull is still intact.
Here’s to your accumulation of real wealth!
Harold F Crowell