GLD Analysis

GLD started as a long opportunity we were looking for back around the summer of 2012. There's a long term moving average (150-day) that has provided excellent entry points in GLD since 2009, it's an opportunity that only comes a few times a year and we were looking forward to this.

However as the opportunity came, many things had changed and we didn't take the trade, the character of GLD had changed and it was looking suspiciously like a top, whether a gold bubble or an intermediate top, I urged patience rather then jumping in on the trade.

Here's why and here's where we stand now.

 Here's the 150 day and how many times it provided a low risk/high probability entry, but GLD had started to peel away from the moving average making the opportunities less frequent as 2011 came. By the time we had an entry signal, GLD had been extremely volatile, a major change in character. A Triangle top had started to develop and we put the long position on hold.

 Here's a closer view, note the top-ish looking triangle and how fast GLD dipped to the long term average, finally GLD broke below the average for the first time since early 2009. Currently we are seeing a very typical bounce back toward the major support of the moving average, we see this so often that it's predictable. Whether the 150 day acts as resistance or whether GLD tries to move closer to the Apex of the triangle in anyone's guess. The current move toward both is on declining volume.

 A linear regression channel stretching back to 2009 shows GLD's immense volatility and what I all a "Channel Buster" above the channel. This appears to be a bullish event, but more often then not, the volatility signals a change in trend after a nice clean channel and price action within it.

 Daily Money Stream shows a negative divergence and a leading one which is a strong signal.

 The hourly 3C chart shows roughly where things started to go wrong in GLD.

 On a 15 min chart we see several accumulation and distribution areas, all along the lines of swing moves. The current move up has a relative negative divergence, it's not exceptionally strong at this point, but it is a warning about the current move.

 a 5 min chart reveals the move toward resistance levels, with each positive and negative divergence marked as well as the effect they had on price, either tops or swing bottoms. We are also seeing a relative negative divergence here as well, this is not as strong as a leading negative in which I might consider a trade, but trouble is growing.

 The 2 min chart "appears" to be confirming the move up on a short term basis.

 As does a close up on the 1 min chart, but back out on the zoom factor...

And the 1 min chart is showing trouble, actually leading negative. This is the way negative divergences proceed, they look the worst initially on the short term charts and start to bleed in to the longer term charts. That is what we are seeing.

I personally don't think this move up is the start of a new primary bull move in gold, but rather the volatility we see one a major support level is broken. I'd say odds are high that there will be a test of the 150 day and maybe even the triangle's apex a bit higher. At that point there may be an actionable trade, but for now, in my view we are still looking at the topping process in GLD, the longer term question is whether GLD has hit a long term bubble or an intermediate top which would pullback significantly before trying to re-establish a primary uptrend.