GLD Update

Our position on gold near term has been steadfast, the charts have been pointing to a move to the downside in the near term, since it has seen several drops and gap fills, this morning, starting very early this morning it went negative and dropped, our charts have been pointing toward at least this, -2.75% decline.

 15 min GLD trend/3C leading negative divegrence at the flat stage 3 top

5 min trend the same

YG/Gold (mini) futures...

 60 min leading negative divegrence.


The 7 min negative showing the right tail end of the negative divegrence.

Yet the narrative for Gold's decline this morning from  Business Insider, which convienently fits in a 30-second segment or read is,

"The plunge comes after a solid employment report showed the US economy beat expectations to add 253,000 jobs in January, while the unemployment rate rose to 5.7%.

The strong jobs report, as well as a 2.2% year-over-year jump in average hourly earnings (a measure of the wage growth the Fed is waiting for,) signals that the Federal Reserve may raise interest rates as soon as June – earlier than the market expects. Capital Economics’ Paul Ashworth wrote in a note Friday that, "the Fed can't wait much longer in that environment, particularly not when interest rates are starting at near-zero."

Today’s drop brought gold to its weakest level since mid-January. Here’s a chart showing gold’s tumble this morning:"

However as shown earlier , gold futures showed a sharp leading negative divergence from about midnight to 3:30 a.m. which already had turned down. There no doubt there's an additional sharp move down at 8:30, however Gold has been destined to make this move whatever the catalyst or even on no catalyst, this is one of the most consistent trends we have been calling for in January other than USO up.

I think it's probable that gold has more downside to come, but with the Feb 20 puts, the time decay becomes a big issue if we get an oversold mini-capitulation event today and bounce even for a few days to fill part of the gap.

So far it's just before noon and volume is already at yesterday's volume, it will be significantly higher by the close and with any sort of doji, star, hammer or other candlestick on that kind of volume, we'll have at least a short term mini capitulation event even if, as I suspect, gold has more downside to go.

As for the possibility of a long GLD position as has been mentioned on a GLD pullback, we are not there, we'd need to see a decent base capable of sustaining a strong move to the upside and we'd need to see the lows including moves like today's accumulated and we don't have that yet either, but this is still a decent possibility and we'll cover bother aspects of additional downside, which I may not have closed a GLD position if it were an equity position and not subject to time decay and we'll cover the possibility if not probability of a longer term long in Gold.

As for today and looking for a short term capitulation event/selling event or exhaustion event, look for a bullish candlestick like a star, Doji, Hammer, etc and volume to lift significantly which shouldn't be an issue as we are already eclipsing yesterday's volume at noon.