JNUG: Are The Mining Shares Rolling Down The Runway?

If anyone has been watching the trading action of the mining sector, they’ll notice that the “character” of the action has changed since the end of December.  The way I expressed it to my fund partner the other day:  “Rather than shorting the rallies and covering the sell-offs, it’s time to start going long on the sell-offs and taking profits on the rallies” (while keeping a core position intact, of course).
It’s easiest to see this point illustrated using JNUG, the 3x leveraged junior gold miners index ETF.  JNUG has carved out a nice rounded bottom and appears to be grinding higher. The entire sector is behaving like this, but it’s easiest to see it visually using a 3x ETF graph:

Today is a perfect example, as the mining sector was hammered from the opening NYSE bell, with JNUG trading down over $3 from yesterday’s close (roughly 9.5%) to $30.15.  It’s rallied back close to $34, up nearly 1% now.  This trading action has been fairly consistent.
What’s even more striking, and something I had not really paid attention to until today, was the massive volume that has been occurring on a daily basis since early November.  This is the unmistakable of the last of the weak hands puking out their positions and the smart, patient money accumulating the shares.
I’m the first to admit that I’ve made so incorrect bottom calls on this sector since last summer.  But then again, is there anyone out there who can say they’ve succussfully been able to predict the direction of any highly manipulated market?   Having said that, I believe that the mining stocks may be rolling down the runway, preparing for a lift-off…
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