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After The Bell
  • After The Bell-GOLD Trade Update-Time To Sell Jan 24th  0 comments
    Jan 24, 2012 5:10 PM | about stocks: GLD, GDX, GLL

    On Dec 14th 2011, I posted this chart of Gold and suggested it was time to go long the metal, buying the exhaustive dip at the $153 level. I also indicated the climb up would be at least 9-13 days in length.

    On Dec 14th I posted this chart of GLL, which is short Gold etf, and suggest a good way to play the rise in Gold would be to short GLL at its 200 day sma around $20-21, betting the shares would fall as Gold rises.

    Here is a chart of the etf GDX today, which is the Gold mining companies. GDX formed a perfect Head-n-Shoulder top, confirmed when the shares broke the neckline downward.

    Notice the reaction/action of this break was to find buyers, move back up to the neckline, creating a failed retest as it moved lower again.

    We take the length of the Head to the neckline, and add that to the bottom of the neckline to get our price target, which is around the calculated support level around $45.

    Here is Gold GLD chart today. GLD has reached the top of a down slope channel. We recommend exiting this trade asap.

    Finally, here is today's GLL chart. The stock has moved down nicely from the recommended short of $20, and now is touching calculated support at a rising uptrend line. We recommend this trade be covered asap.

    Conclusion: GOLD seems to have found a near term top, thus we recommend taking off the Dec 14th trade of going long GLD and/or shorting GLL.

    The patterns suggest GOLD will begin a fast down thrust to the lower channel, which should only take 6-10 trading days. However, if the FED signals QE3 or some derivative of, then these patterns could be broken.

    We advise locking in these profits, then waiting until the next market signal direction appears. I did hear that Dennis Gartman is long Gold now, so for sure I expect the pattern to hold and Gold to decline; he is a great contrary indicator.

    Tim Kathlina

    Stocks: GLD, GDX, GLL
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