Wednesday, July 13, 2011

GLD Still suspicious

Yesterday I mentoned GLD's move higher and said I wouldn't chase it here and that it looked suspicious. There are still signs on non-confirmation that are showing up and thus in my opinion the move is still suspect.

 With the strength of the price % gain yesterday and the volume (both of which look very bullish when viewed by themselves) there should be confirmation in 3C. This 15 min chart, which was not complete in it's move yesterday, has made a consolidation point now, it is not in line with price and therefore creates a negative divergence.

 The 5 min chart should easily be able to confirm, yet it too has not confirmed price strength.

The 1 min chart showed a late day positive divergence, which would lead me to expect a gap higher or early strength, but even the 1 min chart cannot manage an "in-line" status.

If you are long GLD, I would suggest a trailing stop. If you are not, I would only consider entering on a pullback which shows some strength in the underlying action. Otherwise, I'd stay on the sideline until this non-confirmation resolves one way or the other.

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