Gold Update

First, I would reference the GDX/NUGT update, GDX / NUGT Follow Up,  if you are interested in either GLD or Gold Miners because as I mentioned, the two have a very close correlation, although I did want to keep the analysis separate. In this way you are doing analysis of each asset independently and whatever similarities or confirmation you may find, it is more objective and provides multiple asset confirmation, which is combined with multiple timeframe analysis given you a sharper edge and a better view.

This is GLD in green and GDX (gold miners) in red on a 60 min chart so you can see there's a very tight correlation.

Gold miners actually use to lead gold, however when Bernanke unleashed QE, which is printing money out of thin air, inflationary expectations rose as would be normal and gold is usually bought on inflation expectations, not actual inflation which shows you the market's discounting mechanism.

However, as QE /POMO ends this month, many small things we see on a daily basis seem to be getting back to pre-F_E_D intervention levels or correlations, so while I'm not claiming GDX is leading gold right now (it does tend to have better moves), I would not be surprised to see that old correlation come back along with the $USD's historical legacy arbitrage relationship with dollar denominated assets.

Because Gold and Gold miners have such a tight correlation, when I entered the UGLD (3x long gold) position Wednesday, Trade Idea (Swing+) GLD / UGLD & GDX Update I decided for risk management purposes that I'd enter a half size position because I am eager to see if what we anticipated or forecast as far as 3C signals go, are  actually confirmed, thereby confirming our theory as to GLD long and secondly and more importantly, since I closed the NUGT long position on July 9th I've been waiting for a deep pullback, back in to the year+ long Inverse H&S base so GDX/NUGT could build a head of steam allowing them to breakout of the long term base with follow through. 

The day we exited NUGT, , even though it was a strong move of 7.64% on the day, the intraday 3C signals were obvious in that this wasn't the breakout we were looking for. In any case, because they both trade so alike, I can't see any reason to have two positions that move nearly exactly the same from a risk management perspective.

As for gold... It is the futures charts that I find interesting in that gold futures not only confirm the GLD signals, but also seem to confirm the idea of a head fake move which is the concept of the "Igloo with a chimney", the chimney being the head fake move in a topping pattern which directly precedes a reversal (in this case it would be mirror opposite).

 The long term 4 hour YG (Gold Futures) chart shows a positive divegrence that really is defined at a range and break just below the range, this is where I suspect we have a head fake move which would be significant from a timing perspective.

The 60 min gold futures shows the same thing with more detail, also note the uptick in volume as price slips below support, stops run which makes it very easy to accumulate in size and on the cheap without anyone catching on to the position you're building.

 The 15 min chart's leading divergence at the area shows there was something unique that happened in the area.

 And the short term timing 5 min chart shows the same.

In fact, it almost looks like there was a small distribution event, letting out just enough supply to drive prices below the range where a lot more stops would be hit and the shares and then some could be replaced at much cheaper prices.

GLD Charts...

 The GLD 2 hour chart shows an overall leading positive divegrence , but what is also shows is an accumulation range in which each time price starts to rise above a certain level, small negative divergences send price lower where we see large positive divergences, in other words it looks like someone has been working price to accumulate at the low end of the range and controlling price by simple adjustments of supply at crucial times, this is what market makers and specialists are paid to do when they fill orders on behalf of large institutional clients in the stocks they make a market in.

 I just showed the 30 and 60 min GLD charts in the last update from last week, linked above, but I'll show this 30 min leading positive divergence again as it has added to the leading positive position in the area of a probable head fake/stop-run move.

The 15 min chart also gives clarity to the leading positive divegrence just as stops would have been hit as well as showing a smaller negative divegrence near the upper end of the range that was likely used to push prices below support where all the stops were gathered, allowing the accumulators to buy in bulk at a discount to where prices were a few months before.

 The 5 min timeframe is sharper and shows more detail, it leads positive at the range and just under it.

And the 1 min chart shows a positive divegrence below support, leading to a pop above support/ If this is indeed a head fake move, then out entry in both assets (UGLD and NUGT) would be near flawless.

Intraday 1 min, much like GDX and NUGT, there some afternoon weakness which I speculated would bring price down a bit and just widen out the base area (move laterally) which would be healthy for an upcoming breakout attempt.

Bottom line, I still like both and will point out any new entries that look especially interesting, otherwise I wouldn't mind owning either at these levels .