It’s constructive to look at the other side of your positions to see where you might be wrong.  If you’re long a market a good way to do this is by taking the inverse of the symbol representing your position.  At stockcharts.com, you do this by putting “$ONE:” in front of your symbol and it shows you a chart of the inverse of your position.

I like to do this instead of looking at the leveraged ETFs because they tend to decay over time.  The non-leveraged inverse ETFs are fine but they don’t exist for many markets.  Therefore using “$ONE:” gives you the bear market perspective of anything you want to look at.

Let’s take a look at the bear market in gold stocks that launched in 2011 by looking at $ONE:GDX.  From a Stage Analysis perspective you can see a nice Stage 1 base that developed in 2011 followed by a breakout of the base in 2012.  Then the bear market in gold stocks retested the base which happens a lot in early Stage 2 transitions.  After the retest the bear market was off to the races in 2013 with the recent high occurring in December 2013.  Notice though that in 2014 we are now seeing the 30-week moving average flatten out, and a head and shoulders topping formation has shown up on the chart.  This is classic Stage 3 topping action.

….more analysis & 2 more charts HERE