Friday, August 12, 2011

Trade Update: GLD

Now that is an overextended chart. It was overbought and he over buying was accelerating, look at the long candles from $160 up. We were long GLD from about $155 but when that buying volume turned to selling volume I decided to move the stops up to $170 and then go short with a two dollars stop. The reason I said $170 because to me those three sticks above $170 seem isolated. I'm sure that there are people who will differ but to me $170 seems like a line in the sand for GLD.

This chart is very reminiscent of the chart of SLV just before it crashed. Remember there we got out just at $45, but I failed to short on the way down. I don't want to make the same mistake twice. At first the decision they sure look like a good one as the shares went all the way down to $168.65. But recovered to close above $170 at $170.75.

To me things seem very simple. Right now our stop is at $172.34, we either get stopped out or we stay short. In the case that we get stopped out we will be forced to go long again when GLD breaks its all-time high of $175. Until then there is nothing to do. I will be a little more comfortable when GLD falls back beneath $170.

Sell full GLD @ $169.67
Stop at $172.34

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