GLD Update / Charts

I'm not going to make a move yet on GLD, if I had a GLD put then I might be making a move to take that off the table just because of the momentum and time decay, but DZZ (2x short gold) is the asset I chose for a gold short and it's fine where it is waiting without any negative effects, basically waiting to see if GLD adds enough to get a worthwhile bounce and if that bounce is worth trading and/or taking DZZ off the table. Right now I'm inclined to let DZZ sit unless this starts to look more serious as the trade wasn't meant as a scalp around the bone, but a swing+ trade and there's going to be some drawdown here and there on a 2-3 week trade.

Lets start with GLD, however lets start with the longer term and reason for the Gold short and work our way to the present and we'll look at gold futures as well as DZZ.

 Form the 60 min chart, longer term I like gold, I think it has a base in place that's not complete and the DZZ position is there to take advantage of what I think will be one last pullback in GLD to the lower end of the base around $115 (June 2013-December 2013).

The longer term daily, 4 and 2 hour as well as 60 min have been showing this as a base which is likely to turn to a Primary or at least Intermediate uptrend so a decent trend trade and I look forward to the probability of trading it, but I do think that it needs that pullback and that lets the trade come to us on our terms at a better entry and much, much lower risk.

The 60 min chart above shows the accumulation around the December part of a "W"-ish like base (June-Dec 2013). You can even see the head fake move before a mark up trend started (under the orange trendline which was defined support). This chart has stayed in good shape, the recent small negative is something new for this one and it may reflect the larger pullback expected.

The 30 min chart and below though are very clear about a larger pullback, likely to the bottom of the base, maybe a head fake/stop run below it before it moves to stage 2 mark up, it is this 30 min that is the justification for the DZZ 2x short GLD position to ride GLD lower to the $115 level and I used the ETF's 2x leverage as I didn't think I needed any more than that (like options which complicate a longer term swing+ trade). *This chart won't reflect recent activity since yesterday as of yet.

The 15 min chart is more confirmation of the pullback in GLD, the negative divegrence was in place before the pullback and still looks good in leading negative position so I'm not thinking DZZ needs to be scrapped, this is just a matter of personal preference, how much you like to trade, have time to trade, risk appetite, portfolio size/transaction costs, etc. I'd have no problem holding DZZ though a GLD bounce, but I would like to be able to at least hedge it with maybe a call position.

 Here's the 15 min chart close-up, while the main trend is still negative, intraday trade recently has shown some accumulation, it doesn't endanger the trend above, but does suggest a counter trend correction or bounce.

 This is the 10 min chart showing the same recently with yesterday's activity included, "When there's blood in the streets..."

I think that's pretty much all this is about as capitulation like volume did pick up yesterday.

At 3 min we have an in line status or trend confirmation at the green arrow and a positive divegrence in what is turning out to be a little range, that's where we most often see institutional activity, in these ranges in which no one following price thinks anything is happening.

 And 1 min intraday.

I think you get the feel that this looks like a fairly new divergence and even for a bounce in my view it's not there yet, this is why I'd consider taking GLD Put gains off the table, but DZZ long doesn't bother me as it's not going to be effected like an option position so it can wait.

I'd need to see a lot more than this for any trade, but the fact we are seeing what looks like early confirmation of GLD moving toward a bounce means it needs to be on the radar, you saw how fast HYG's distribution/leading negatives took hold yesterday, PLUS I'VE ALREADY SEEN SOMETHING ION GDX, THUS THE REASON FOR THE PARTIAL CALL POSITION OPENED TUESDAY.

GOLD FUTURES

 The 1 min intraday is also positive, this is not enough for me, but it is telling me something.

If you look close, the 15 min futures also have a positive a bit bigger, this is more on the level, but I'm not looking at trading futures, I'm looking at GLD and I need the objective evidence and high probabilities which are likely, but not there quite yet.

The long term 60 min shows clearly that gold has some longer term trend downside which is the move to the bottom of the base so I think DZZ can stay in place, but there would be some draw down which could be hedged with some GLD calls or traded around which is not my preference, I'd only do it if I thought it was really worth it as the trading portfolio is set for equities only.

 3 min DZZ has some confirmation of the 3 min positive in GLD so that's also bolstering the case, although 3 min isn't a big deal, it is a start and as you know new divergences start on the earliest timeframes and work out as they get stronger.

And the longer term 60 min DZZ which is the chart that was the reason for the trade along with GLD in the 10-30 min range confirming as DZZ put in accumulation .

I'd keep this on the Watchlist if you are interested, I'm guessing that a few different assets will likely move if Gold does including the $USD, the carry trades and likely treasuries so TLT may be worth a look as well.

Let me take a closer look at GDX (Gold Miners ) and see if there's anything more urgent there.