Monday, September 26, 2011

GLD Watch

The bounce off a low on gold futures (see my earlier posting) has far greater magnitude than that of the gold exchange-traded fund GLD.

Daily chart

sym phase trend adx   200/50 40/10

GLD gapped down at today's open on the half-hour chart and continued to drop, reaching a low but without any significant retracement so far. Meanwhile, gold futures continue to hover around the 23.6% retracement level.

On the half-hour chart, the decline that began on Sept. 6 at $185.85 hit today's pre-open low of $155.24. (The stock has since then fallen further.)

So what's really going on here? Gold is a global commodity play -- the trading never stops on weekdays. GLD is a stock-market play. It doesn't trade overnight.

The low on the futures came while GLD was not trading, and the GLD low set in pre-market trading came in at 4 a.m. Eastern, 90 minutes after the futures low. By then the retracement was halfway complete.

Round-the-clock markets and time-limited markets don't scale well against each other. And today's gold play is a textbook example.

Calculating a low for GLD based on the futures chart, the significant Fibonacci retracement levels should be as follows, based on an imputed low of $149.70:

  • 23.6% - $158.36
  • 38.2% - $163.72
  • 50% - $168.05
  • 68.2% - $172.38


  • 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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