XAU took a dive, and bounced where it should have today. DUST ramped higher. My earlier thoughts why I liked DUST long.

Gold Mining stocks are still in a bullish uptrend. It’s paid off to buy the dips in the ETF’s NUGT (2X Gold Miners Bullish ETF), and GDXJ (Junior Gold Miners Bullish ETF), since the bottom pivot in October 2011. We’ve had three drives up, with the last dip off the 3rd drive being bought right where they should be. I think we’re going higher in these ETFs. We’ll see how quickly they can get back to recent pivot highs.

Futures were down a decent amount this morning at around Naz -40′s, S&P -20′s, and yet still fought back. TZA touched the 51′s at the market open, and fell to 47 from there. I think it’s heading to 58.

I just don’t see TNA holding. I could be wrong, but my bias is still short, and see a break below TNA 35. We’ve driven down three times, and working on the 4th test now.

Spot gold has recently taken on some wild swings, falling near 1700 after nearing a 1900 high, followed by a rapid rise back above 1800. This rapid movement, and quick ability to recoup lost gains adds to the potential for another leg up in gold stocks.

HUI which is the Amex Gold Bugs Index has made three ascending pivot tops. This has formed the possibility for a triple ascending pattern on a point and figure chart. If this plays out, HUI could see 800. NUGT the 2x Gold Miners Bullish ETF will take advantage of this same move.

You can’t complain when the ETF position you buy (last post) yields a 10% move in your direction the same day. DUST – the 2x Gold Miners Bear ETF jumped higher on the higher low pivot, stalling at the 200/150 daily moving average verge point.

Spot gold going up does not automatically make it bullish for the XAU, and gold mining stocks. Central banks have been buying gold. It’s almost touching 1685 today.

Meanwhile, the XAU has bounced after a meaty pullback. It’s a small bounce with a lower high pivot confirmed today. I’m long the 2x bearish gold ETF DUST.

DUST higher low pivot:

The precious metals sector of gold and silver stocks has been fairly easy to trade in the past month.

A washout bottom came on June 16, 2011 in the XAU with a low of 187.18. We then had a four-day rise, followed by three days down, which set up a higher low pivot. A swing trade buy signal came on June 28, 2011, with the higher low candle over 192.89. You’ll usually have one or two down days within a 7 to 9 day rise. The down day came on July 1, 2011. That’s to throw bullish traders off their trades. The complete move from June 27, 2011 to July 7, 2011 was eight days. The move stalled near the 200 day moving average as it should.

We now have a pullback in progress. There should be support now again where I’ve drawn the trendline from previous support. I will look for the XAU to find support near that 201 to 204 area. The index is now above the 20 day and 50 day moving averages, which is bullish. Dips should be bought for now.

Some of my favorite traders in the sector are the ETF’s NUGT and its bearish opposite DUST. These are the Direxion Daily Gold Miners 2x ETF’s.

I also like the looks of TGB, RGLD – the stock has the potential to break out higher.

We’ve hit my short-term trade target for the Bullish 2x Gold Miners ETF NUGT at the underside of it’s trendline resistance.  This ETF tracks the XAU somewhat, which has hit the 200 daily moving average.  They should stall here, but then I expect a possible move for the XAU up to it’s 50dma (red line).

Also watching ZSL and AGQ on the silver side.

The Gold and Silver index XAU is trading just below trendline resistance near 200.  I would like to see it get back over that to challenge the 200dma (blue) near 207.

I’m long NUGT, which is the Direxion Gold Miners 2x Bullish ETF. It still has room to reach it’s trendline resistance of 34.

XAU has found support at a prior pivot area. NUGT – the Gold Miners 2x bullish ETF is a great way to play the index. The DXY – Dollar index should stall at the 50dma.