I had gold as my one long position for a few days, with good results, but as I mentioned in my video yesterday, I felt it was time for gold to change course and soften up again. Thus far, it has done so, and as I'm typing this, it's balanced just above 1600, threatening to drop beneath it. I've built up a fairly large short position in GLD with a tight stop at 155.61. (Edit: Ummm, the moment I typed the period to that last sentence, support failed, so……..I'm going to publish this now; the break isn't reflected in the screen shot below).
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Hedging GLD As The Herd Shakes Out
Shaking Out The Herd
In a Slope post on Tuesday ("30.2 Yield Curve And Gold"), Gary Tanashian noted that, "over the last 1.5+ years gold has shaken out the herd". Our host Tim, not one to follow herds, reminded us on Tuesday that he's currently long gold via GLD ("Target on GLD Long Approaching"); nevertheless, according to Reuters, more GLD herd members did get shaken out last month, with the gold ETF seeing a billion dollars in outflows in January. In this post, we'll look at a couple of updated hedges for GLD. First, though, a note about Bernanke's testimony yesterday, and an interesting gold chart Bespoke Investment Group posted in response to it.
Either Way Day (by Springheel Jack)
SPX hasn't yet reached an important area for support or trendlines. While that doesn't necessarily mean that the low isn't in, I'll be assuming that it isn't unless we see a conviction break on SPX over the 1515/6 resistance area. I'm torn as to whether the current topping pattern on SPX is a very ugly H&S or a double-top, but either way the high yesterday was a retest of the broken pattern support level. This is important resistance today: