GLD Follow Up (Gold)

Yesterday this update for GLD was posted , the gist of the post was that I see no reason to abandon GLD long calls from last Friday, as well as showing the very tight correlation between GLD and miners recently (GDX).

I'm not under any illusions with GLD, I think it heads to the $114 area as the sub-intermediate trend, but the short term trend looks like a counter trend bounce is very likely, thus the reason I chose GLD options, if I were to play the downside after a decent pop to the upside, I'd use something with less leverage for a longer swing trade, perhaps a 2x leveraged short, but we're not there yet.

Honestly I'm not excited at all by gold futures, silver actually has at least 1 chart that is eye catching or at least more so than gold futures, but GLD (as limited as the divergence may be-out to 15 min to 30 min) might be, it's still more than enough for the kind of move we are looking for and where gold goes, GDX is usually pretty sure to follow.

While we are in stealth, hunting mode, I'd really like to see some of these positions move so we have something going on while we're picking up the trail (scent) of the market, which I have an interesting sentiment update to share with you later.
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 This is the 15 min chart of GLD, the trend is clearly down and I think as I  said in the last update and a week ago that GLD will move to the lower end of its range in the $114 area to gather more accumulation before making a really significant move, but this move we are looking for to the upside off a small "W"W base is called a "Counter trend rally" or bounce may be more appropriate in this case. Most of you might be thinking, "Fill the gaps", however, to be fooled, counter trend rallies have a purpose and it's not because the market is oversold.

Wall St. can only make money when they are trading against someone, it's a zero sum game, for one to make money someone else has to lose it. When you have a trend like this in gold, there are too many people on the same side of the trade so a counter trend rally mixes things up.

The defining feature of a counter trend rally is found in its need to be believable as to get traders chasing the counter trend rally, thereby giving Wall St. a chance to set up a new short at better levels and to have retail more than willing to buy up the shares offered short by Wall St., SO THE DEFINING FEATURE OF ALL COUNTER-TREND RALLIES IS THEY ARE SHARP, THEY ARE STRONG AND IMPRESSIVE.

In fact, I'd say a bear market counter trend rally is one of the strongest rallies you'll see in any market including bull markets; take a look at the DOW crash of 1929, few people notice it, but soon after the crash the first of at least 5 counter trend rallies lasted SIX MONTHS and gained +50% just after the start of the most historic crash the world remembers in equity markets.

 GLD 2 min breaking support this morning and 3C is positive on the break.

Here's a closer look, the volume was there for the stop run that is used for momentum and doing some last minute shopping at a discount.

GDX is prepared for the move too and as I showed in the post linked at the top from yesterday, there's a tight correlation between GDX and GLD. Keep an eye on these, this may be where some of our action is at today.