Several people are seeking guidance on when they should buy NUGT. The problem is, NUGT is an incredibly volatile trading vehicle and the risk associated with a poorly timed entry is high. Furthermore, severe decay issues make triple levered ETF’s profoundly flawed long-term investments.

With my warning and disclaimer out of the way – this is what I currently see in the chart. In Elliott wave terms, price appears to be in a 4th wave correction, and there should be one more drop (5th wave) to complete the structure. Divergences typically form during the 5th and final wave thus supporting a trend reversal. The sharp decline to $7.30 is clearly a strong 3rd wave lower. The question now is, will we get the 5th and final wave?

(Click on image to enlarge)

Currently, there isn’t enough evidence supporting $7.30 as the final low. If an investor bought at this level ($9.00), and prices drop into a 5th and final wave, there could be a 25% drawdown or more before the last wave terminates. That is a considerable risk, which I’m not willing to take.

Sustained success as a trader comes down to how well you manage your risks. Appropriate position size and not overleveraging your account are keys to victory. I will continue to monitor the charts for clues, and if a better entry presents itself, I’ll alert members immediately.