GLD/SLV

Earlier in the week, after 3C correctly called the attempt of both GLD and SLV to breakout to new highs as a zone of distribution, we saw a fast move (as is often the case when a breakout fails) sending both below their support levels. This week we saw a bounce, I've posted numerous times my belief that it was "just a bounce" as late as yesterday around 1 p.m.

As I've said, I'm not opposed to a longer bullish view on either, I'm just not buying the talking points about both, "This time it's different". Analysis is based on market action and market action has shown us another failed move in both as they tried to test resistance. Here are the charts...

 GLD's chart on a 5 min 3C-Clearly the attempt at resistance at $135.50 showed the first clear divergence in this timeframe and led to my continuing belief we were seeing nothing more then a bounce. GLD is off those levels at $132.72.

 The 50 day m.a. has tracked recent support, you can see the break of it yesterday and today. I might be looking for a test of that moving average soon.

 GLD's Daily 3C chart showing deterioration/distribution at each test of $30-the last failed test led to the fast move down below support. Currently GLD is starting a leading negative divergence which is the worst kind.

 SLV's 5 min 3C chart showing an attempt to take out resistance near $29 and a negative 3C divergence. There's a small bit of strength currently that may test the moving average seen below.

SLV has tracked the simple 10-day moving average well, you can see the break of both the average and support. The possible 5 min strength seen above may lead to a test of the 10-day average.

All in all, both are deteriorating and starting what looks to be possible trends lower. If this is a shakeout, then it's a big one. However when we see these right angle patterns of this size, they often function as tops. I personally am not calling a short trade in either, but I also wouldn't go along with the mass hype of the precious metals until they can show some resilience. For the time being, I'd just be an observer and not have my money at risk in a long trade.