The Rumor Scandal...

We all know there are rumors and sometimes they seem to come from the Central Banks through intermediaries like the WSJ, but Draghi himself? It doesn't seem likely, but it does seem likely someone up high knew he'd be talking about some of these things. What is incredible is that some at the ECB where left in the dark.

From the WSJ: Many ECB Members Surprised By Draghi's Comments Suggesting New Bond Buys, Source Tells WSJ


Germany seemed surprised and those two are like two peas in a pod. This is by far one of the stranger rumor days, not just because of the content, the extent (this is the 3rd day now of ECB rumors-it makes sense Draghi is trying to jawbone Spanish Yields lower as one region after another is looking for a bailout), but really strange is that many of these are coming directly from Draghi with other ECB members and the closest ally to the ECB (some might even say puppet master), Germany, in the dark to some extent.


So the question is how much does smart money believe? Today is tough with it being a Friday actual Human traders are scarce as they take their 3 day weekends or leave early on Friday as is common, making it worse is the HFTs were so active today, much of what we see is just machines pushing prices to levels that will trigger floods of volume, they have little to do with real information regarding accumulation/distribution and where money is really going.


We'll take a look at GLD any way, there are a few interesting things...

 From a  1 min accumulation zone to the move up, a relative negative divergence warning that there's selling in to higher prices and the rumors culminating today. It seems GLD should be headed higher on such rumors yet it doesn't move much, half a percent and most of that on the open. The signals show a leading negative divergence, I have to assume HFT activity is represented here as well, so when the rumors that should drive GLD higher pop out, there's a leading divergence suggesting strong selling in to any demand and price barely reacts suggesting the same as does volume at the rumor times.

 Here's one of the un-sourced rumors, 3C makes a new low as GLD rallies a bit on the rumor until it is dismissed by the ECB.

 Again, during the biggest rumor day the short term chart is leading negative.

 Even the 5 min chart is leading negative, it seems as GLD moved higher the divergence got worse (going leading negative).

The funny thing is, I kind of suspected this move, but I just didn't see the positive divergences that justified going long GLD. The 60 min chart, as long as it is (and important), has given some very good and very sharp/fast signals. The first long signal to the left in white developed in 2 days and that was the largest 1-day move up in GLD since 2009, it was sold in to and the signals ther were clear. The pops between 6/29 and 7/5 had no 3C support and failed, then a positive divergence, but in the falt area before the most recent run, no positive divergence and no support from 3C.


It seems that these most recent rumors either were not taking seriously or even if they were genuine, there's too many conflicting agendas in the EU to get anything done or they realize any such action is still a long way off and it's more important to bring GLD back down to a price range in which it makes sense to accumulate it again (remember the longer term prospects are looking like GLD is building a base for a longer term bullish move-also a ways off).


It would seem that equities are still running on hope as GLD was not too excited about this latest round of hope induced news, however we can't forget the majority of the market today was likely run by machines tasked with one thing, hit stops.