GLD/Gold Follow Up

As for the GLD trade just closed down, as I said it's not because I don't see a bigger pullback, but why give up gains or all potential gains when the position can just be re-opened at a better price, more appropriate timing and essentially double down those same gains?

The P/L for the GLD May monthly Put from Friday, Trade Idea: GLD Puts came in at about another 1/3rd gain today over yesterday.

Nearly +30% for just over a day of market exposure. With the way the market has been in a large range all of 2015 and more recently a tighter range, it seems that the hit and run approach with some leverage tends to work best for short term traders, a bit more nimble than usual.

Quickly I just want to give a broad update on GLD as we do have multiple timeframe analysis with several potential trades from short term puts to swing trades all the way out to a primary trend trade and I believe we are in the area where all of these are going to start coming in rapid fire succession, one after the next, each being a larger and larger price move.

 This is the weekly primary trend in GLD which was a huge gold-bug mentality type trade in 2011, you couldn't say anything about Gold that wasn't entirely glowing as everyone had drank the Kool-Aide so to speak, so when we called a 2011 top after a nice stage 2 mark up trend (@ #1) at the red arrow, I had some personal experiences with , well with a fund manager that again demonstrated the insanity of these bubble mentalities, a real study on cognitive biases. At the time the projection was for either an Intermediate or Primary (Dow Theory trend classification) downtrend, as you can see the call was correct and entirely based on what we saw in 3C at the time.

Note the large descending triangle in the market at the top, triangles this large are never consolidation patterns and almost always tops or bottoms depending on the preceding trend (usually opposite the preceding trend so a top at 2 and likely bottom at 3), so the current descending triangle through 2013-2015 looks like a bottom area or base.

 The 4-day GLD 3C chart isn't the best overall, but it's the best for showing the different stages and 3C reactions at them like confirmation at #2 at stage 2 Mark Up and distribution at stage #3 Top as well as leading negative distribution in to stage 4 DECLINE. Now we have a positive divegrence again at what appears to be a large stage 1 base, thus somewhat like oil's longer term prospects, I think Gold is basing and building support for a primary uptrend or what would be a gold bull market. This would be the long term primary trend trade in which I prefer to use less leverage and just let the trend and time do the work with very little oversight of the position needed, although I'll obviously stay on top of shorter term developments.

This hourly chart shows the recent pick up in the 3C trend which often happens near the end of a base before a breakout to stage 2 mark up or rally. Again this would likely be a longer term trend trade.

 At 30 minutes you can see the last positive divegrence that sent GLD higher, I suspect we are going to see downside, but this trend will reassert itself, making for at least a decent swing trade and a pretty large one at that.

However the 15 min chart has shown a recent 3C negative divegrence which is what the most recent put or short trade has been about. I suspect a pullback to the $110 area, this is what the Put position was based on although you could play it any number of ways.

However very near term as started to be seen yesterday, there's a small intraday 1-3 and 5 min positive divegrence since our entry last week, it's also at a support level so a bounce and some backing and filling in the local gaps makes sense, which should just allow us to re-open a new put position for the continuation of the divegrence on the 15 min chart (down), If I wasn't using a lot of leverage, I may have just waited it out, but with options leverage, a profitable trade can turn south quick and there was no reason to risk that.

So you can see there are a number of different trades, each increasing in size that look very probable. This is the nature of multiple timeframe analysis and picking the right tool for the trade.