The partial hedging I have in place (DUST) is a necessary evil in doing business as a risk manager. It helps that my portfolios are doing very well on the whole, in giving me patience.
Here is what I am looking at, using GDX as the example. I have drawn a downtrend channel that ignores the false breakdown (noise) and the post-FOMC false breakout (noise). I’ll allow for the gap to fill but then become pretty intolerant of the hedge if further strength were to follow a gap fill.
Remember that despite my view that gold stocks have been in short-term bear flags, they are in a longer-term bull flag, which encompasses the entire post-July correction. If/when this flag breaks to the upside either from here or from the SMA 200 area, the next target is the equivalent of HUI 500 as we’ve previously reviewed on the big picture monthly charts.