The sell signal issued for Gold (GLD) on 3/19/14 from quantified StockTwits messages has ended. The downtrend line in quantified messages has finally be broken to the upside. Unfortunately for gold bulls it didn’t happen after a strong positive divergence with price. As a result, the sell signal is merely closed rather than flipping to a buy signal.
For aggressive traders who believe in GLD there are other factors that might warrant a tightly controlled long trade. Notice that GLD had a strong volume washout in June of 2013. Then a double bottom in December 2013 on lower volume near the 114 level. That was followed by a very strong rally up to the descending trend line that has been in place since the peak in late 2012. It is logical for the ETF to be turned back at that trend line again, but since the double bottom has held for nearly six months the odds are increased that any retest of the 114 area will hold. So a long in the 121 to 114 range would only risk 5% against the chance the long term downtrend is finally over.
Please note we don’t trade against the trend or attempt to catch bottoms and I don’t recommend it either. I’ll personally wait for a rally that clears the moving averages and holds above a good trend line, then a retrace that is supported by various technical indicators including quantified messages from StockTwits or Twitter.
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