GLD ... The Next Bubble to Burst?

GLD reminds me a lot of the reversal in the oil bull market, an ascending wedge, a breakout above the wedge making it look like a failed pattern and 3c 60-minute chart nose-diving. Does it make sense? No, not really, neither did oil at the time of the dollar or any number of trades. In any case, below $125.50 and I'd start getting my toes wet on the short side.

This is how distribution works, (what 3C is showing via the negative divergence)-apparently someone is letting go a large position in GLD and t do that, they need demand, there's been great demand and talk of GLD at ridiculous valuations; that's a sign of a bubble it self.

Just keep it on your radar, if it falls, it falls fast and hard.

The 1 min Divergence

The DIA was the earliest and the worst. The little white arrow at the end is why I suspect some early strength, you can see it's not a huge signal.

Here is the QQQQ they were later on the divergence and had several rolled over until it went leading at the red arrows.

The SPY faced the same problem, the earlier relative divergences were a sign of things to come, but were rolled over. I believe t was the market makers gunning for orders at new highs which would explain the sell-off volume. You can see here I've added Worden's TSV, although I use a far longer version then I've seen anyone else use (55 periods), it also did a good job of calling the top. Below "0" it's in pure distribution mode.

Overall, considering these were only 1 min charts, I'm very happy with 3C's performance today. Although I will say that in watching it on the NASDAQ, today looked like there were a lot of bots trading and there was a strong emphasis on a trading range that is still intact. Go back and count today, how many false breakout/pattern failures in just these 3 averages. After 6 months of this at extreme levels, why traders continue to follow the textbooks instead of the charts is bewildering to me.

More in a bit... research time

Possible early strengh

3C has it's ups and downs like price, unfortunately we don't have much time left to see how this up will play out, but the way it stands now, 3C is showing modest early strength tomorrow. Again, if we had another 15 minutes, it may have resolved to the downside. I'm thinking though we will see some early strength on the 1 min timeframe.

Next Support Coming Up

There's not a whole lot of support under this, except for the gap, which should be fairly strong. We'll see what kind of momentum this next support level creates.

Market Maker Fun Day

As I said, there's be volume on this breakdown. The bear flag breakout to the left drew in longs as they saw a bearish pattern fail. Remember, the stops and orders on the bottom of the flag had already been hit making this a Crazy Ivan trade. That breakout level also became a support level, so the longs that bought the breakout from the failed flag, all put their stops in the same place-AS ALWAYS! WILL THEY NEVER LEARN?  Look at the volume on the breakdown. For a market maker, the money here is the difference between the bid and the ask multiplied by volume. It's been a good day to be a market maker or specialist

GIL

For a longer term short  trade-with risk management allowing for some possible upside, GIL is looking very bad.

Note the 3C distribution into the top, the volume is correct for a top-heavy on the decline and I doubt that it moves much further north then the last rally. On the other hand, if the market breaks down soon, this may be as far as she goes. I think this could be trading in the high teens.

KERX

This is a somewhat similar pattern, although it already pulled back to the 10-day m.a. and appears to be starting its next leg up.

This is a long/short scan screen I use, all 3 triggers are long.

DNN

DNN looks like a long I'd take a serious look at. It seems to have just broken out of a mini cup and handle-type formation, but it's done it's work in base building for quite sometime. I would expect a follow through move tomorrow, but you can always wait for a pullback to the 10-day moving average.

First Support

All the averages are at first support, the SPY at $114.72 which happens to also be the breakout level from the bear flag. A break here could have significant volume.

1 min divergences

The 1 min divergences are problematic in that they can get run over by a big flow of money, but when they continue to develop into leading divergences , their signal is pretty strong, so we should see some continued downside from here.

It seems not only did theBear Flag get taken out on 2 false break outs-up and down-or at least 1 false as of this time, but all 3 averages hit new highs again triggering orders, putting money into the market makers tin cup for the day. It's been quite an active day for market makers and specialists.

Add the SPY to that

The SPY just started it's own negative 1-min divergence on this last move which appears to be a parabolic run through the top side of the flag I posted several posts ago, hitting orders again.

Negative divergences

Surprisingly, there's two 1-min negative divergences on this last parabolic run up, they are in the DIA and the QQQQ, the SPY is inline. It'll be interesting to see of they come through.

Another Bear Flag Gamed and Breadth

Breadth today has been worse then I've seen it recently.

% of Stocks at new highs

 The A/D line breaking down

% of stocks above or below the 50 bar moving average

Negative divergence

Here's a bigger bear flag that formed, note the break down and the volume. More market maker games.

Resistance

Note the long wicks on the candles in the red box-the wicks at the top. This is telling us that there's a zone of resistance there. Note the price level-$114.50, another obvious level to trigger trades.

And the Answer....

IS YES!

Market Maker Fun Day?

I say market maker, but that includes specialists.

Here's a Bear Flag, the traders already took positions on the volume. Lets see if this gets gamed too.

Crazy Ivan Next?

With so little moving the markets so far today, the market makers are going to look for a way to make money, so watch for a Crazy Ivan-the stops below are cleared, now they may go for the $114.80 level and hit orders there, a "Crazy Ivan"

Will Traders Ever Learn?

Again, as usual, huge volume as the trading range support is taken out. Naturally part of that volume is short sellers, but a big part is longs setting stops at intraday support. It happens every single day, multiple times a day and they just don't learn. They're stuck in textbooks instead of learning from the charts.

Morning Update

So far the market is in a holding pattern, this is not very bullish, after Friday's move there should be follow through. Right now we seemed to be stuck in a trading range between $114.40 and $114.80 on the SPY. In the past which ever way the market broke out of the range is the way it would close, but now-a-days, I'd expect to see several false breakouts.

The 5 minute 3C is negative, it could impact prices today, the 1 min has a divergence here and there, but is largely tracking price.