GLD / GDX Update

I'm not taking any steps right now with GLD or GDX (Gold or Gold miners) positions right now until I better understand what's going on.

The best I can seem to find re: the gold drop from Friday is "Speculation that the F_E_D will reduce monetary stimulus as the US economy strengthens"

Something about this doesn't hold water for two reasons, 1)
 the correlation they are talking about hasn't existed since June 30 2011 when QE2 ended and 2) I commented on Friday how the correlation between Gold and the market was out of whack with the correlation that has dominated since the end of QE 2.

For example...

 From 2009 to the end of QE2 around mid 2011 (which was the same time we called a top in gold and expected an intermediate to primary downtrend to begin in gold, we got at least an intermediate downtrend in gold (red line above) vs. the SPX (green).

Note the inverse relationship since, it flip-flopped 180 degrees.

Here's a closer look at GLD (red) vs the SPX at the end of QE2, also the same time we called a top in gold as the gold bugs were more bullish than ever.

However something strange happened Friday...

Note how both gold (yellow) and GDX (gold miners - light blue) both headed higher with the SPX.

I commented on this Friday....

"gold should have moved down, but it moved up just as if the equity futures where still falling..."

The normal gold/market (SPX) correlation of opposite or inverse as seen on a long term 60 min chart..doesn't hold any water today, the market is up, Gold "Should " be down, but it's up "seemingly" because there's no arbitrage correlation. It's like the risk on assets are moving (market averages), but the flight to safety assets are (moving up) as well.

I'm not sure what caused either on Friday or Today. All I know is that there are plenty of divergences that are much larger than a 2 day move in place that suggest both gold and gold miners head higher.

This is what we have for now, but I'll be keeping a close eye on the group.

 GLD and the lower base area I suspected we might see, while short term this looks to be bearish activity, longer term it provides a much larger, more stable base for gold to rally from.

Almost the EXACT same thing is true of GDX on the same timeframe.

The 60 min GLD shows the classic accumulation pattern of distribution (in smaller amounts) at the range's highs and accumulation at the range's lows, however the last month or so has seen the divergence improve substantially to a leading positive, especially as the support level was broken, pointing to the probability of a shake-out move, or head fake which we see so often just before a reversal for a number of reasons, that couples with the stronger divergence makes GLD look ready to make a large move to the upside.

Then consider the VIX pointing to a large move to the upside and the market trading opposite the VIX, also gold has been trading opposite the market.

 GDX on the same timeframe tells the same story, it looks a little different, but the end result is exactly the same.

On a 15 min GLD chart it looks like there was some weakness (although not very strong), just enough to send GLD lower, the positive divegrence as it went lower is clearly much stronger than the former weakness at higher prices.

 The same is true of GDX on the same timeframe.

So far this is what we have in GLD today on the intraday chart, I'll keep an eye on this and look for migration, this very well could be a timing flag like we see at least 80% of the time before a reversal.

Also watching the leveraged ETFs is important, they'll often show a lot of unusual strength right before a reversal.