Friday, September 23, 2011

GLD Watch

The exchange-traded fund tracking gold (the metal, not the miners), GLD, broke below the 20-day Donchian price channel and continued to fall as the trading day progressed. The gold mining funds -- GDX and GDXJ -- are dropping in a similar manner.

sym phase trend adx   200/50 40/10

The price also broke unambiguously out of a trading range that had lasted since Aug. 25, with a low of $165.88 (by one measure), or Aug. 26, with a low of $171.75 (by another measure). Trend channel boundaries, like love, are often in the eye of the beholder.

This is the second major break in GLD's price run-up that began in early July. The first highest high peaked at $184.82 on Aug. 22, and dropped in three trading days to a low of $165.88 on Aug. 25.

The price then ran up to set a new higher high, at $185.85 on Sept. 6, and then drifted downward until Thursday's downward gap.

Today's trading has set a lower low, moving GLD -- the metal gold, which some politicians think of as "real money" -- into a downtrend. (It will be interesting to see how the political discourse changes now that "real money" is on the decline in terms of the "fake money" in our wallets and our brokerage and bank accounts.)

A decline below $142.55 would place GLD below the low point of a sideways pause that lasted from early May to late August.

Prior to that, the lowest low was $127.80 in January. So GLD has a long way to go before it seriously dents the profits of the year.

And it seems so strange to think that GLD, as recently as 2006, was selling for under $60. Bubble, anyone?


  • phase: 20-day price channel phase, with green for bull trend, red for bear trend and yellow for neutral trend.
  • trend: Price direction, green for higher highs and higher lows, red for lower highs and lower lows, yellow for neither.
  • adx: Average directional index location, indicating the strength, or the temperature, of the trend. Orange for 40 or greater, aqua (light blue) for 25 and up but below 40, magenta (light purple) for 20 and up but below 25, and brown for anything below 20. (Mnemonic: Orange for the overhead sun, blue for the surrounding sky, magenta for sunset on the horizon and brown for the earth.)
  • 200/50: The moving average cross, green for the 50-day ma above the 200, red for below and yellow for closely aligned.
  • 40/10: The moving average cross, green for the 10-day ma above the 40, red for below and yellow for closely aligned.

About my trading methods

Read a detailed explanation of my analysis method, including trading rules.


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

The trader’s greatest sin is inaction. Sleeper, awake! Seize the Nietzchean moment. Roll out of bed and trade.

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