Today's US 2 Year T- Auction comes in weak

So weak in fact that PD's had to take down over 50% of the offering. Credit Suisse has an opinion with regard to the weak auction, it could be summed up as this, "You, whose eye's are starry and account is long with the thoughts of fond memories of Jackson Hole, prepare to be disappointed".

Now I'm no Treasury specialist, I'm not an economist, but it seems very clear to me that the F_E_D with each passing month is having a harder and harder time justifying QE, whether it's macro data coming in better than expected, whether it's food and gas inflation or the question of the independence of the F_E_D in an election year, everywhere you look, it seems to be increasingly evident that any QE will have to wait until 2013.

Whatever Rick Santelli believes about GLD, the most reliable correlation I've seen is gold acting as a QE sentiment indicator, if QE looks probable, then GLD rises, if not, it falls.

With that in mind, with what reversals look like fresh in your mind...

 Every major reversal in BIDU was preceded by a head fake move, I keep coming back to BIDU because it's a beautiful example, but we see this at least 80% of the time and we see it on EVERY timeframe from an intraday 1 min chart to a monthly chart.

I've drawn just about every chart formation one could imagine in GLD from a big bear flag, to a diamond to a triangle and they all have this one feature sticking out. I can't prove it, but long term members know that we have called F-O_M_C policy before the announcement on strange divergences which suggests either the relationship between Bernie and Jamie Dimon is a lot closer than the law would provide for (remember all of these big bank CEO's have helped bail Bernie's butt out of the fire at one point or another) or there's some one in the media who make a nice living releasing embargoed F_O_M_C policy at the news stations (although in this case, this seems to be a longer term realization of the QE reality).

If Jackson Hole disappoints, GLD goes down and that is Friday, I've already mentioned how on a yearly or multi-year basis, GLD has been one of the largest top 5 hedge fund holdings and many have significant profits in GLD, it is another potential sell candidate to meet HF redemptions.

So with an auction today coming in ugly, with the common sense of the QE argument, and with the hedge fund situation and finally GLD having broken above every technical pattern I can draw at the moment, it seems very likely that GLD will not be in this same area next week, maybe not even in the next few days.

There is a clear area of resistance from the last 4 days, this has been the standard I'd like to see broken to enter additional GLD short/Put positions as I already have enough, I want the concession to take additional risk that is above and beyond what my normal position sizing rules are.

However you may be in a different boat and may be interested in diversifying your positions, so GLD charts are coming up next.