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Updated: 6-Month Daily GLD:
Pattern: Bump & Run
Overall Interpretation: Bearish
Resistance: Dark Blue & Green
Support: Light Blue, Gold Trendline, & Orange (Gaps)
Target: $152 - $154
Entry Signals: Price deflection off blue resistance; 5MA cross below 10MA; +DI deflection off ADX and cross below -DI
Watch for stalls at gaps (play gaps and support on stalls); price/volume, StochRSI, CMF all demonstrate lack of market support for price. Again, I'd suggest 10% OTM call hedge in the event of bad news. First gap at 172.50 - 173.50 will offer minimal initial support.
XLF 6-Month Daily:
Chart Pattern: Slope & Fall (as opposed to bump & run) (sarcasm)
Resistance: At Gaps
Support: Not Yet Existing
A noteable divergence exists between the StochRSI and volume denoting uncertainty in market sentiment, confirmed by ADX/-DI and CMF; all 3 gaps will offer resistance, the majority of which will be felt between 12.58 & 13.00 due to the wide sloppy base formed from August 5 through the 17th which is laden with emotion and uncertainty; 5MA suggests a waning in downward pressure as seen in its slight deviation from its prior angle.
Today's earthquake gave us a good peak under the market's skirt revealing a skittish, uncertain, emotionally-laced attitude. Play this one with caution, use the gaps as sell points if price stalls occur, then re-take position upon upward violation. I always recommend ignoring candle wicks (spikes) when interpreting charts as they can occur at any time during the trading day and usually represent only one trade, whereas the candle body more certainly expresses market majority. We need to see one more candle body to establish reliable support at 12.00. Again, very skittish market. Any bad news will wreak havoc. The anticipation of Jacksonhole appears to currently be the driving force, at least for the time being. Wouldn't hurt to place a short-term 10% OTM put hedge on this play.
GLD 6-Month Daily
Chart Pattern: Bump & Run
Support: Green/Blue/Orange Trendline
Strategy: Ratcheted puts with hedged calls
Noteworthy is the acute divergence in the trendline from approximately 30 degrees to a radical 85 degree angle. Other noteable divergence is seen in the relationship between the StochRSI and volume (heavy volume/weak RSI) demonstrating market support for price is waning. This is confirmed both by the ADX/+DI and CMF. A conservative play would be puts with a 10% hedged call, selling the puts at support lines if price stalls occur, re-taking new put positions on violations of support. Hedged calls could be taken at stall points for insurance against bad news in the market.
