Replies to post #9483 on Direxion Daily Junior Gold Miners Index Bull 2X Sh (JNUG)

[jboatswain]

Thursday's 10% drop (discrepancy) is odd. I expected to lose 2%, but not 10%. I don't have an explanation for this.

However, I have an explanation why GDXJ doesn't rise with GOLD in sync: even if GOLD reaches $1400 next week, I dont expect GDXJ to raise 30% for simple reason that miners profits increase when GOLD stays at $1400 for at least 3 months. Just a spike for 3 weeks doesn't cut much.


So, there are many things going on: GDXJ rebalancing; JNUG not allowing creations. I digged more into GDXJ rebalancing y'day. GDXJ does quarterly rebalance. BMO markets paper says the next rebalance around June 30. Checked GDXJ component shares for 4/13. Not much of a change.

GDXJ quarterly rebalance is a regular affair, nothing to worry about. This time it is going to be special, as the underlying index MVGDXJ is going to add more miners, and delete some others. When MVGDXJ changes, GDXJ will end up rebalancing (not the quarterly one).

Let's wait and see on Monday and Tuesday.