Leveraged Miners ETF Struts Its Stuff

Investors have been looking for safe-haven assets since the start of 2016, and that is leading them to gold. The SPDR Gold Trust (ETF) GLD, the largest gold-backed exchange-traded fund in the world, is up 8.91 percent year-to-date.

Gold Rallies Galore

GLD's strong start to the year has been enough to illicit rallies in gold mining stocks and ETFs such as the previously downtrodden Market Vectors Gold Miners ETF GDX. GDX, as it often does in either direction, is overshooting GLD's 2016 move higher with a year-to-date gain of 18.51 percent. The solid start to 2016 for GDX comes after the largest gold miners ETF lost 24.7 percent last year and 12.4 percent in 2014.

Related Link: Gold ETFs Regain Some Luster

Predictably, good things for GLD and GDX are turning into great things for the Direxion Daily Gold Miners Bull 3X Shares (Direxion Shares Exchange Traded Fund Trust NUGT). All NUGT has done to start the year is surge more than 55.07 percent.

“From a technical perspective, NUGT is trending higher, picking up momentum. The RSI as a gauge of short-term momentum continues to trend upwards, well above the generally accepted trend level of 50. In the past 30 days, 57.14 percent of the daily returns have been positive. The MACD signal is slightly above the signal line here, and trending towards the zero line. A more supportive uptrend may be probable should it move above the zero line,” according to Direxion Leveraged & Inverse ETF Quantitative Research.


During gold's bear market, which started in 2013, catching rallies in GDX and NUGT has been a trying endeavor. However, when it comes to NUGT, a data point that has been previously highlighted in this space has proven helpful. When traders flock to NUGT's bearish equivalent, the Direxion Daily Gold Miners Bear 3X Shares (Direxion Shares Exchange Traded Fund Trust DUST), that scenario can be a prelude to more upside for NUGT.

Good news for traders involved with NUGT: Traders allocated $27.6 million to DUST on February 2, more new money than was added to any other leveraged Direxion on that day, according to issuer data.

Other data points confirm traders' reluctance to embrace NUGT despite its recently impressive showing. For the five days ending February 2, NUGT's volume was more than 10 percent below the trailing 20-day average and over the past month, the ETF's average daily flows activity was negative, meaning traders were departing the fund, according to Direxion data.

Image Credit: Public Domain
Posted In: Direxion Leveraged & Inverse ETF Quantitative ResearchGoldgold bulliongold nuggetLong IdeasNewsSector ETFsCommoditiesIntraday UpdateMarketsTrading IdeasETFs

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