GLD

Guerilla trading has been pretty successful for our short term positions, Friday we opened GLD Puts and closed them yesterday for a nearly 22% gain in 2 days, this isn't my cup of tea as far as trading goes, but you have to use the right tool for the right job, had I not closed those puts yesterday, they'd be worth a lot less today.

Here's a reminder of why we have to adapt to the market rather than force ourselves and trades on the market which is like running in to a brick wall.


This is nearly 1 month of daily trade in the SPY, WHAT IS THE TREND? Remember, we live at the right side of the chart without the benefit of hindsight.

 There's certainly a lot of chop and it's a virtual meat grinder for anyone trying to trade like a trend trader or even swing trader, in fact from the StockTwits stream, few traders know what to do and are losing money hand over fist.

So here's the puzzle put together...

This is the trend in the SPY and the area in white is the chart above. Sure, you could trade the trend, IF you knew there would be a trend and if you had exceptionally wide stops. July might have caused you some doubts, each one of those candles represents a full 6.5 hours of uncertainty for most traders.

Back to GLD, I want to stick with trading GLD from the short side for now, GLD has been acting as a QE sentiment indicator and with the recent stronger US data and inflation data, both make a September QE3 announcement even more unlikely as I have been saying and as Goldman admitted this a.m., furthermore the election makes an announcement this year even more difficult, so if Gold is a QE sentiment indicator rising when sentiment i hopeful for QE, then what should we expect?

I closed the Put position yesterday with full intention of looking for a higher area to start a new put / short position in GLD.

The charts thus far.

 Friday's Put and yesterday's closing of the Put, that was a timely trade because we waited for and had GOOD SIGNALS. We have to put the probabilities in our favor and that means not entering a position because you think you might miss something or exiting because you are nervous, but having some evidence to base your decisions on and decide if the probabilities are strong enough.

 Short term, this is the 1 min chart showing some accumulation at the lows yesterday and today we saw an appropriate size move up from that accumulation, but there's no negative divergence to justify a short position here, in fact these short term charts are also, like the market this morning thus far, VERY mushy.

 The 1 min chart' trend with reason for entering a put Friday and good reason to close it yesterday, but no reason to take any further action yet.

 The 3 min chart ha a bunch of green arrows, I don't usually feature charts with green arrows as they mean 3C and price are moving together or in line/ trend confirmation. There's no signal here, thus there's no trade yet.

 Now at 5 mins we see some stronger leading signals.

Also at the important 15 min timeframe we see some more important leading positive signals. Could a long position be taken on these signals? Yes. Do I feel that is trading with the probabilities? No, but if you are nimble, that seems to be where the short term probabilities are and that's also exactly what we want, price strength and then 3C weakness in to that price strength, letting the trade come to us.

I don't care if GLD breaks down in 5 mins for a 10% fall, if I don't have some evidence to base my position on, there are a lot of other stocks to trade.