The slight higher high yesterday after the big runup was the tell for the top in DUST.

NUGT should move to it’s 20dma in the next few weeks.

This is what can happen when a stock or ETF breaks out of an 8- 12 week consolidation. The inverse silver ETF DSLV was aided by making higher lows and highs, as it crept up that trendline.

This weekly chart of the DUST ETF is just beautiful. I’m going to stick this in my trading patterns section. You had a major support area build up, which was touched three times. You then had a retest of that area, and a green candle off of support the week of March 2, 2012. A retest back to 40.5, which is the horizontal trendline that I drew some time ago. We had four candles up. This is followed by another green candle, which tested the downtrend line. This was followed by a power candle. I cannot emphasize how important these candles are when they begin trend moves. This is followed by two inside candles. This will create a huge move in one direction or the other. Generally, it follows the existing trend. If you’ve read any of my stuff, you know that I favor moves of seven candles from major and minor pivots. We are now seeing the seventh candle blowing off at the top of this weekly chart pattern. Just beautiful. You never know where these will end. They usually will end with a bang as we’re seeing now.

If you must trade against these, I find that it is best to trade the inverse ETF intraday against these longer type of moves.

Remember. The trend is your friend.

 It’s now nearing the end of May, and we know what summer brings sometimes – dull and listless trading. With this move in gold and silver stocks and metals, we may be in for a bit of consolidation now.

If you look at the gold and silver charts. They both have major support areas right here around $27 for silver. And $1540 for gold. Now look back at the DUST weekly chart. Imagine if gold and silver decide to consolidate here for four months. Then they put in a green bar and start to trend back up. Can you guess what might happen?

Since my last update of gold etf and silver etf trades, silver has slowly drifted lower, while gold has stayed near the same 1630 level.  I thought the hourly gold chart might send it to 1580, but that did not occur.

I’ve been sitting in the bearish Silver ETF – DSLV for a month now… looking for the 38 range trade. We are about there. One characteristic I have seen, when it comes to the gold and silver sector, is that they can go to extremes more than other sectors.

Attempting to pick a bottom here may still be too early. When I do sell DSLV, I don’t expect to jump on any long side silver ETF trades immediately. Unless of course, there’s a decent setup.

When I mention extremes in the sector, I can refer to the Gold Miners Bear ETF – DUST, and the Gold Miners Bull ETF – NUGT. Both ETF’s are moving into their seventh week of consecutive higher highs, and lower lows respectively. I’m a big fan of seven as a turnaround number, where a reverse can happen. Is this seventh week a spot to unload DUST if I was holding? I think so. I would first need a setup to then purchase NUGT. Currently, we have a nr7 setup forming. That combined with an entry on the 15 min. or hourly chart would be a trade I would try. It wouldn’t surprise me however if it failed. That’s where the extreme move may come in. With the trend currently down, I want to put as much capital on a reversal trade, as I would one following the trend.

A battle has been fought in the same price range for precious metals for the last week.  I believe we’re close to an outcome in this battle that ends with a victory for the bears.

Gold is showing an ominous head and shoulders pattern on the hourly chart.  A break of 1630 projects to 1580.

The inverse gold ETF – DUST is coiling into smaller trading ranges after a powerful bullish candle. That candle came after a bullish trend up of 4 weeks. The trend is up for this Bearish ETF.

The 3x VelocityShares Inverse Gold ETF has held it’s 20dma…so far, and is trading back up into the channel. This is what a bullish chart looks like.  Note the huge green power candle that began the turnaround.

In contrast, the 3x Long Gold ETF – UGLD has been trading below both it’s 50 and 20dma’s. It’s better to short these patterns on spikes up, than try to pick a reversal. Reversals usually occur on bullish power candles, like the one seen in the DGLD chart.

On the Silver ETF side, the battle is obvious.  The 3x Inverse Silver ETF – DSLV has been up against definite resistance for a few weeks now. The last week has been one with a tight consolidated range. This usually leads to sharp moves soon. A break above that resistance leads to blue sky.

The silver hourly chart does not have major support below this 31 level.

You can’t buy natural gas because it’s at 10 year lows.  It can always go lower.

The natural gas ETF GASL closed on major trendline support 2 days ago.  As soon as it broke below, it became time to go long the inverse natural gas ETF GASX.

GASX held it’s 20dma on the slight pullback.  Trading above it’s 20 and 50 dma’s made it bullish.  Caution should be taken here at the 200dma.

If you’re on the correct side of these VelocityShares 3x ETFs, you can gather quick percentage gains.  DSLV and USLV are two excellent silver ETF traders I’ve been dabbling with lately.

DSLV has about reached 50dma target.

The VIX.X shot down to a low of 15.23 today.  The last time it was this low was last July 2011.  The low for the VIX.X last year was 14.27.  I was thinking of buying TVIX today, but with an inside day on the SPX, it’s not the most conservative option.

XIV daily is up at the last pivot high area, and the 200dma.  We’re close to some short-term topping action possibly.

I’ve been long SSO during this grind higher for the SPX, and mentioned I was looking for a spike to 1330.  We had that move today with a day high of 1328.3. We’ll see how the index handles that trendline.

I bought NEM on trendline support of the weekly chart yesterday. The stock was down seven days from it’s last pivot. Quite a reversal today.

XAU is nearing the 200 target I mentioned a few weeks ago.

The 50dma is the target for NUGT gold ETF.