Buy, Sell or Double Down?
Friday, January 25, 2008 at 12:01PM I'm watching the price action in GLD, and write this response to the few e-mails that have found me this morning asking things like...
"Should I add to my position on this breakout?"
"It looks like GLD was going to breakout, but is trading lower; should I sell?"
"I don't own any, should I buy?"
"Why doesn't GLD have options?"
"Is it ok to buy a miner instead?"
"Are you still in GLD? Where are you getting out?"
I am going to let everyone participate in the festivities of helping me answer the million dollar question about GLD.
Here is a weekly chart that provides a glimpse off the bigger picture...
And of course a daily chart showing the most recent trend and today's price action...
Last, but not least, a intra-day chart (60d) showing the details of this recent run to it's prior high.
There are a couple different ways to look at this, but how about risk first. This should lead to a good discussion on trade strategy and concepts that can be applied to any trade.
How can you manage your risk in a trade like this? Would you enter here? Explain.
I'd love to hear a few thoughts. If so, I'll provide a detailed explanation afterwards.
UPDATE: Do you see it now?
References (10)
-
Response: bheagyabbheagyab
-
Response: tdndubeetdndubee
-
Response: gopkeacogopkeaco
-
Response: alendronatealendronate
-
Response: sildenafilsildenafil
-
Response: vckolbmxvckolbmx
-
Response: cnfmodwmcnfmodwm
-
Response: gntoxsihgntoxsih
-
Response: svuwbpsksvuwbpsk
-
Response: oqkiljahoqkiljah
Reader Comments (110)
GLD has been Golden (LOL) since the fall. Until the Fed stops crapping on the dollar, and reduces the supply of money this will keep going up.
I'm sensing a discussion on REE or JEE or OAEE comin up. :-)
GLD....
From an entry point of view....which is how I manage my risk best..(REE)...and, I have my chart drawn differently than JK....buying today....not for me. I see GLD could easily drop down to $85-$86..and still be in my uptrending channel..and that would be the time that I would buy...and it it runs up from where it is now...I won't chase it..my rules don't allow it. in my opinion, too much risk to the downside, from a chart only point of view.
Question about NMX. It got hammered during last couple of weeks. Since last three days it has gone up. From technical analysis, when/where is the good time to buy calls? Or did I miss the boat. Any suggestion on the technical analysis will be very appreciated.
Thanks a lot
broke from a huge multi year symmetrical, followed by 25 point bull flag.. and appears to be setting up for another... on the 1-year, another symmetrical break up i December... followed by another bull flag setup... that has broke out, and confirmed.. and on the 60-day intra-day.. its gapped and retest the new high.. seems pretty straight forward no? Support was 85... now its 89.40 (ish)... and it really wants to go to 100... just like GOLD wants to goto 1000..
Is that too obvious of an answer?
Technical Analysis...
Don't buy calls on downtrending stocks.
I'd look closely again at that 60 day chart...all the way to $85?
I was late to the party on GLD but got in last week on the pull back at c 87 with a target of 94. I'm expecting it to hit that level next week at which time I will sell. My mental stop is 86 so it was a 7:1 risk.
If I were to buy now I would keep a tight stop, risk 50c to make $4.
"Don't buy calls on downtrending stocks."
Outstanding.
-Bill
I'd wait for it to come in to the 13-day EMA around 87.50 or so. If it hits that and bounces, the next leg up will be fast and furious.
I would set a stop a little under the 18-day moving avg around 86.50.
GLD is once again hovering around 90 which was previous 52 wk high and thus new resistance. However the move in the past 3 days is not supported by high volume so IMHO: 1) Not a breakout, 2) Not a good entry point YET. Now if it 90 gets stablished as support I may consider adding a small amount to my current position (In at 77sh).
I may also consider moving my stop to the top of the gap today if the level of support gets confirmed. Too Tight Jeff?
Did not have any selling signal.
Very curious to hear Jeff's thoughts.
GLD -- definitely still uptrending. But, for me to enter, I need a pull back to support. I wouldn't count the most recent high as support as that's just a prior high. The only way I see an entry here for me is if it runs up a little further, then pulls back gently to where there is a convergence of diagonal and horizontal support. Then, I'd get in.
Otherwise, I have to sit and wait. Risk management first.
Jeff,
I am a bit confused by your drawing on your previous post today. Are you saying that things are going to go straight up from here?
GLD
I think you wait for a pull back to at least 87 or down to 85, depending on how you draw your support lines. If you want to get in now I would set a pretty sight stop, but it is too risky for me at this point. Long term still bullish. But please do not trade on my analysis
Carl
gld, bull flag break out and retest of stress area, perhaps a drop to 88.3 to fill the gap, but don't count on it...previous history has a lot of gaps not refilled...risk/reward is very low on initial entry here...if you didn't get in at 68, why now?
GLD,
I entered around 87. Wouldn't add here.
CD,
I can't count how many times I said I was bearish on the market, or how I am delta negative, etc.
Yes, I am bearish. The chart was a spoof...prices don't move like that.
Z Bob,
You'd get in now to take it to $100.
Michelle,
How do you normally add to positions?
My first public analysis...here goes:
I had a diagonal trendline drawn starting in 8/30 or so that GLD crawled up until it slipped off for good on 11/27.
It hit it's head on the same trend line on 1/14 and 1/15 and looks like it may have that line to cross over again at 92.5 or so. I think it could fall back to $86.
I wouldn't take it now if I had no other input besides my perspective.
But looking at your charts Jeff, it looked (or, looks) good.
I wouldn't til it got over $92.5.
I'm new though.
Lara
If I see a strong support level, retest, heavy volume at support. Right now I have my quota on GLD according to my rules. I try not to put too much in one thing.
Now THATS what I call a search link!
Hi All:
Relatively new poster here and I love this community. Try GDX. Is is the gold miners ETF. It tracks the price of gold and also diversifies among the miners. Nice volume and it has options available.
Hope this helps!
Romeo Bravo
Jeff,
I completely agree...10% is a great profit! These decisions are much easier when you are already in with a huge profit, though! You and Eric beat that drum to death when the initial breakout occurred on 9/6/07! (Thanks by the way!)
Jeff,
The comments appear to be on the fritz.
All
I just got a messaage from TOS that there is some sort of issue with AMEX affecting quotes.
"The chart was a spoof...prices don't move like that."
...unless I've bought puts and Uncle Ben cuts.
Anyone looking to enter puts before the close? I entered IWM around noon and and am stalking PCU, RIMM and SINA.
I got in at 85....hoped to exit in April at 100.my first trade with skin, took a stomach punch and dumped some at 87, i'm holding pat on the rest. Theres no listed options, but if any of you guys want to buy a call at 95, I'm having a blue light special sale on them. I;ll re buy a dip and do it again at to 100.
Been in GLD since early October... entered at 72 ... added a little at 78.00 on 12/20. Should have added on 1/17 but didn't because of market conditions .. I may add again when it dips back to 90 or so ... will review many things at that point since I'm in strong. Stop today is at 86.50 ...
Good exercise Jeff ... a lot of views running around here ... that's why we all follow your lead in saying ."make the trade your own" .....
jym,
Comments on the fritz?
Maybe its me but I'm seeing then out of order and appearing and disappearing. If it's just me then nevermind.
John H,
We'll re-evaluate that scenario when the time is right.
PS- I updated the post with another chart.
Cortez,
Been looking at
-SINA but think I missed it (would have been good at 43ish).
-DRYS(at my REE).
-PCU looks nice but not at REE.
Without having looked at anyone else's response, here is my $.02, with Dan cheering me on.
The last time I would have added to my GLD position would have been on the break of the symmetrical triangle around Christmas. However, when I look at the 2 year chart a case can be made for a bull flag, 10 pts in height which actually puts us at the magic number of $100 if the pattern plays out.
Interesting....
Now I'm going to go back up to the top to read everybody else's take.
Wow,
That new chart shows a whole lot more support where it is than I originally saw.
I'll have to go back and re-evaluate.
Two great posts today! My vote is to wait for GLD to pull back before adding more or just holding position. GLD is at resistance with volume dropping and the metal at a high.
Regarding the second post question on the two trend lines: What I have learned here would support a continuation of down trend. What I have learned from FED actions is to expect ANYTHING but the trend, ie.the first curve screeming up. As a result, I will pull the plug on puts at the first opportunity and waite to watch the reaction on Tuesday!
By the way, just rewatched the archive entry videos - REE concept slowly sinking in. Thanks for ALL YOU DO!
Tom in SC
So we have a cup and handle on GLD with a crack in the cup toward the handle?
Jeff,
Off the subject, but did you buy GS today?
Is there anyone here bullish on the market? I am short term bullish, looking to see Dow 13000 before we see Dow 11000. So I am looking at todays action as a short term pullback on this rally.
Agree? Disagree??
Westy, how are you getting 60 as DRYS REE area?
What is PCU REE from your perspective?
-SINA but think I missed it (would have been good at 43ish).
-DRYS(at my REE).
-PCU looks nice but not at REE.
Hi all,
Market has resumed its fun again??? Why? Is it recession? is it fear of holding over the weekend (i'd hate to have been holding over last weekend) or is it because the world has been turned upside down for a day!
YES THATS IT... So... G'DAY MATE - and happy AUSTRALIA DAY!!!!!!!!!
http://www.australiaday.gov.au/
So all you "Yankee's" grab a fosters have all your mates around for a BBQ, listen to the tripple J hottest 100 (hottest 100 songs for the previous year as voted by listeners and always played on australia day!), sit in the pool, or just spend the day at the beach with family- why? Because its great to be an Aussie!
Have a great day (or night for you guys)!! Im gonna be loving mine today!
Michelle,
Yes, I bought puts. I traded this recently off the $200 mark, had to do it again. I am sitting here wondering if I should hold over the weekend.
That's a lot of risk, huh?
WOW! What a fabulous discussion...on GLD. What a teaching/learning tool. It was so informative to hear everyone's thoughts and rational. Really made me think too.
Could we do this again?
Jeff:
Been in GLD since Sept 4. Added on a slight pull back in early Oct. Missed the opportunity to add in Mid Dec. I did add a little on 1/22. Average cost is $71.36 My current Stop is at $85.50
Ken,
I'm bullish on the market!
Cortez - watching BOOM, STLD and COH. Pulled trigger on COH. Probably it for the day - though boom is looking good.
EEEK!!! Its uncle ben! No No bullish!
hey ben, i'll give you a $5er if you dont cut rates, supprise the market by already playing your hand this week and having bugger all left to do next week! hehe please ;)
GLD
Here is how I see it.....and I naturally cannot, and will not dispute what Jeff see's..I see it too..this chart..just for a different perspective.
C'mon Kohler, bring it on..hammer away!!
(did I really just say that?)
http://img246.imageshack.us/img246/7921/gld6mo012508mn9.gif
Got into GLD in October. If I had been around more these last few months there's a couple of places where I would have added to my position. I did add the other day with the volume spike after a couple days of declining volume. I like that GLD is above that 90 mark but there's not a lot of volume today and it's not a very good LEE for me.
liz
raimo,
When did you start channel trading? If I recall correctly that was a specialty of Trader JH. Is this part of your new rules or did I just miss something?