GLD - June 5, 2010

Let’s talk money, real money!

Last time I blogged about gold was the post of May 18, 2010.

I showed this chart


And said:

“GLD reached my first cluster around 120-122. Ideally, it would correct. If I could script it, I would send it down to 113-115 before the next run up.”

This is an updated version of the same chart


So far, it has behaved as per script!!!

It has corrected from 120+, it has pulled back to where we wanted to pull back and it is now bouncing.

On May 9, I said

“We have a confluence of fib time extensions around current price. The next timing confluence comes around second week of June. First off, all these fib stuff are theoretical and I treat them as such. Secondly, just from the Fib itself, it is not possible to say whether a timing band is gonna give us a peak or a valley. One has to study it in the context of price and trend. Right now, if my overall count is correct, I am looking for the top of Intermediate 5 = Major 3. It does not seem like we have enough waves for that, so maybe in June we get a top. Again, it is all theoretical – they sometime work and sometime don’t.”

Second week of June is just about to kick off, and I do not have enough evidence to say whether we are about see a bottom or top next week or so. It may be none and we may be dragging in-range. The next time extension comes third week of July.

Once again, all technical projections, be it fib-based or driven by actionary lines are theoretical and should be treated as such.

This is a 60-min chart of GLD


Assuming that my broader count on the weekly and daily frames is correct, I can count the internals in 2 different ways. Unfortunately, I cannot confirm one or the other unless we get a sharp down move. A break of previous low will indicate that the latest pick might have been minor 4. A break of 112 will indicate that the whole might be wrong.

It’s a tricky situation here as GLD can correct to 112 and still be OK longer term. So, any new position might have to take that into account. On the other hand, what I have marked as either orange or blue 4 might be just part of a larger sideways correction.

The pullback to the 115 area which we had anticipated was a place to add back what I might have sold around 120. Now, I can’t really think of any low risk entry with high confidence. Any new position here might have to accept a 4-6% risk at minimum.

Let’s take a look at the weekly chart


It’s a beautiful chart. However, if the count is correct and we are about to see an intermediate wave 3 top, I am not sure how much upside may be left in here before GLD corrects down major 4 wave. Also, we can see the weekly momentum has not been as strong as it was leading into intermediate wave 3. So, while I still expect higher prices in the days and weeks ahead, I expect to see some good chops as well.

One long-standing point of concern for me is the performance of gold miners versus gold


I just don’t like it when the producers of a commodity lag the commodity they produce. Judging by how the above chart stands at this point, HUI may be set for some rough times ahead.

Over all, as of this writing, I do not see why I should sell long standing gold positions, and I do not see why I should be complacent with miners.

PS. Gold is entering a period of statistical seasonal weakness from June to August. Being statistically weak does not mean that it shall again be weak. But, it would be interesting to see how Gold performs in this period and whether it holds firms against statistics or not.