My current GLL trade, short gold the metal, is consistent with
Jack Chan's sell signal for GLD. Also it's consistent with
his GDX sell signal -- and so both the metal and the miners are heading down,
What is the fundamental basis? Well, the fundamental basis that pushed gold to unprecedented heights, all the stimulus is still there, but:
Gold ETFs Pause on Bernanke, QE3 Talk.
Technically, Gold has begun a another downtrend with high downside volume, similar in quantity to that last summer:
Admittedly, the late Dec '11 Swing Low tested the Dec SL with much lower volume. But the volatility in metals, and lately in gold in particular (see the monthly chart below), suggests trouble (mid-term) to me:
| Retracement
Date |
|
High |
|
Low |
|
% Price Drop |
| Dec '10-Jan '11 |
|
1227.5 |
|
1044.5 |
|
14.9% |
| 2008 |
|
1033.9 |
|
681 |
|
34.1% |
| 2006 |
|
728 |
|
563.5 |
|
22.6% |
| 2004-5 |
|
458.2 |
|
411.5 |
|
10.2% |
| 2004 |
|
433 |
|
372 |
|
14.1% |
| 2003 |
|
384.5 |
|
320.1 |
|
16.7% |
|
|
|
|
|
|
|
| 2011-12 |
|
1923.7 |
|
1523.9 |
|
20.8% |
As I have pointed out before, the major retracements in the long-term uptrend have been substantial, although the first glance does not show that. The current retracement has provided the highest drop except for during the 2008 recession crash. Except here, the stock market has recovered from its mid-2011 dip, while gold has not. Of course the market volume suggest that recent uptrend is very unstable:
