Yes, ugly day for Nugt and thoughts
I was speculating that CPI could give an upside surprise and curl up a bottom for Nugt. There was an unexpected small uptick (1/10%), which helped the greenback on more hawkish Fed views of rate hikes. The CPI uptick would have needed to be much more to benefit gold/nugt on the inflation component.
With that in mind and commodity prices being crushed in Oct, November CPI would undoubtedly show lower inflation IMO. I personally do not believe cost of goods and services only rose by 1/10%, but I'm also aware CPI methodology is highly controversial and it's a political driven formula to keep the numbers low. Regardless, don't fight the Fed trend of anything, trade with it.
Let me switch to Gold and Nugt now.
Gold is near the top of the descending channel and the indicators are in overbought territory short term, suggesting that Gold has a probability of reversing and continuing a downtrend, as the dollar may start making new highs on interest rate hike speculation again.
Nugt - What's going on with Nugt?
Gold has bounced in the last 2 weeks from 1180-1250 area, about 6% upside. The bounce from the bottom started Oct 6th.
Nugt has completely failed to trend with gold on the bounce and is down roughly 13% in the same time period.
Trying to uncover every possible hidden catalyst that may give Nugt a short term rally has been a failure (Gold, CPI, Technicals, world events etc.)
I'm out of bullets now, my last speculation stretch is that miners continue to get crushed on fear of earnings and the fear has been over excessively discounted in the miner stocks. Now that we are near a retest of the 18.88 bottom, likely tomorrow, if that fails, who knows, maybe Nugt goes to 15.
If the bottom holds and earnings are not as bad as expected (typically they are not), that could be one of the remaining catalyst to reverse course IMO.
With all that said, since I still have a Nugt position (trade failure), I will move to Dust tomorrow if the 18.88 bottom fails and actively trade the two once earnings start to roll out on the miners. If the earnings are bad, then I will resort back to my longer term thesis of staying long Dust until gold gets to the 1000-1100 range.
On the other hand, I think the cost of production is around 1200 per ounce (could be wrong), if that's the case and gold drops below cost of production, that could lead to less supply if miners start closing doors and catapult stock prices of liquid miners who are able to weather the storm. Another 'if' variable in the long list of them all.
Anyone else have opinions/input why miners did not bounce with Gold ?
News 
Market Data 
Discover 
