GLD / GLL Update

I've been okay with holding the GLL (Ultrashort Gold) long on a risk basis, but I'd never hold it if there weren't some signals there.

I know what the conventional wisdom regarding gold and QE is, however over the last 2+ weeks gold hasn't done anything with QE3 out on the table, it didn't take gold long to move up in 2010 after the Jackson Hole speech telegraphing QE2 before it started. I am not going to pretend like I know what's in store for Gold over the long haul, but I will show you a chart. This is simply why I chose not to fight the F_E_D, but to look to the data, to listen to the market. Had we wet our pants and reversed every position on September 13th we wouldn't be very happy right now, that doesn't mean we stop listening to the message of the market and assume we know what the market will do.

As for gold, GLD and the GLL long, here's the updated charts.

 Since 9/13 (QE3 announced), GLD has been a good "relative" performer, it hasn't been a great performer on any other basis than relative vs the market and it hasn't done anything resembling QE3 expectations as buyers stepped in big time on the 13th.

 First GLD timeframes...

 1 min GLD shows  a head fake move on the 1st of the month, 3C didn't support the move up and was negative instead, it's remained in a leading negative position roughly in line with price (where have I seen that before? Almost everywhere in the market averages!).

 The 2 min chart was (as is usual) in a relative negative divergence at the first head fake false breakout and then went to a stronger leading negative divergence at the second head fake false breakout.

 The same theme can be seen on a 5 min chart which gives us pretty good confirmation between timeframes, the yellow boxes are the two failed breakouts that had no 3C support.

 The 15 min chart shows a very fat positive divergence just before the F_O_M_C  on the 13th, smart to buy down there for smart money as there was plenty of retail buying on the way up, built in demand to sell in to. The 15 min chart has been progressively worse, again both attempted breakouts (more likely head fake moves) saw distribution in to them, now the 15 is leading negative just about to where it all started on the 13th.

Now GLl (ultrashort GLD), which I'd be happy to see a swing move in, but I try not to set expectations on moves, I just watch the underlying trade like yesterday when it said it's probably time to take profits or at least some in RIMM.

 The trend on the 2 min chart is just about the opposite of GLD, although GLL's lower volume makes trade a bit spottier. There's a positive divergence at the head fake break below support on the first.

 The 5 min chart shows a quick negative divergence on the 13th before the F_O-M_C, since it has seen a decent leading positive divergence that also caught the break on the first with a positive divergence.

 The trend of the 15 min chart is interesting too, it has been in line with the move down and only recently has gone positive or leading positive to be more precise.

The 30 min chart has less noise and the trend is clearer, again it is leading positive and positive at both downside shakeouts. This is why I'm wiling to hold GLL open.

As for the longer term prospects in GLD, many of you may remember when we were waiting for GLD to hit the 150 day moving average to buy GLD back in 2011, we didn't because something didn't look right, sure enough, since the 9/2011 top, GLD hasn't really done much.