GLD Update

Even if you are not in the GLD trade, there are a couple of common themes that are in this update that apply to all stocks and market averages, it's the new reality of technical analysis.

First for those of you who remember, the GLD options trade (PUT) was conceived at the white arrow. There was a zone of resistance seen at the red trendline and 3C was negative.  We almost never see a reversal without a head fake move first and the day before I posted that there was defined resistance and for GLD to fall, they'd have to sucker in the longs on a head fake move first. The next day GLD (at the green arrow) put in a parabolic move up. You know how I feel about parabolic moves, they almost always end badly and worse on the way down (in this case) or the way up if the parabolic move was down to start. You can see that concept held true as GLD lost a lot more ground and a lot faster when it fell. The yellow box is the head fake and that's where the put position was put on for a 215% 3 day gain.

 Another concept is that of mini capitulation seen at the left in the white box, big volume in an established downtrend (this is a downtrend for the timeframe), this almost always leads to a reversal, but reversals are rarely "V" shaped and more often "U" shaped. You can see support at the red trendline, again, before a reversal we almost always see a head fake / shakeout move which came yesterday in GLD as it crossed below support briefly. Note RSI was positive at the shakeout yesterday and as GLD is at resistance today, RSI is leading positive, suggesting more gains in the days ahead.

 Short term 2 min 3C caught yesterday's shakeout and was positive, meaning those who were stopped out had their shares accumulated and the move up came the next day (today).


 The longer term 5 min 3C shows a positive divergence at the end of the parabolic drop, it remained in line with price action and put in another more powerful leading positive divergence at yesterday's shakeout, today even though I think the gains for the day may be capped as we are at resistance, there is still a leading positive divergence in GLD, again suggesting more gains in the days ahead.

The long term 30 min chart shows very clearly the negative divergence on the head fake move up to the left at the red arrow and a positive divergence especially at yesterday's shakeout, it is also leading positive today. The reason the 30 min chart doesn't show the divergence as early as the 2-5 min charts is because it takes time for the shorter term chart's strength to filter through the longer timeframes, but the longer the timeframe, the stronger the divergence. So to wrap it up, I expect we ill see more gains ahead in GLD based on what we are seeing now.