timwest

GLD - sell short strategy & reasoning

AMEX:GLD   SPDR GOLD SHARES
823 5 4
What is MOST interesting to me about GLD             here is it has faied to attract new buyers at a time of near panic as measured by VIX             reading above 40 which happened concurrently with fears about the solvency of European banks, ratings agenciy downgrades and announcements to throw more debt onto the back of most developed nation's economies. Obama's fiscal stimulus announcement could have added $100 to the price of gold             if this market were in a strong bull phase. So when I see a situation like now I would think it would be wise to step out of this market and let it fall. NOTE THE CHART: The last 5-days of trading have occured entirely inside the day's range of 6 day's ago. This is rare and a warning of lost momentum . Sell short now & sell stop at 174.34 and use a 183 stop loss initially, lowering that stop loss by 1 point for each 1 point drop in GLD             .
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timwest PRO
5 years ago
The stop can come down quite a bit given the size of the drop.
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kb2425315
4 years ago
I don't understand "last 5 days have been in the range of just one day's range"? 6th day according to the chart is Sept 7 - range was 174-178, even if you look at the weekend bars which are not showing up- sept 9 would be 6th day and 179-181 is the range. I am just trying to make sense of your statement there. Could you explain it a little bit? Thanks.
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timwest PRO kb2425315
4 years ago
Sure- the blue box represents the "true range" of the bar from 6 bars previous. "True Range" incorporates the previous days close to capture the gap. For more info on "true range", you can consult varieties of technical analysis books. So, with that in mind, the following 5 days all occured "inside" that 1-day range. That kind of behavior showed me that the buyers were timid and the sellers were more aggressive, which was at odds with what was going on with the headlines at the time. When a market can't rally on good news, then step aside. Does this help at all?
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kb2425315 timwest
4 years ago
oh yea- now I see exactly what you are saying. Thanks! Hey Tim, ever thought about writing a book?
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timwest PRO kb2425315
4 years ago
I have thought about it but I haven't set a goal or made a plan of action. I would write a book on "market profile" as that is what I am most passionate about. I'm glad you like the charts and we can thank TradingView for designing and building a terrific website that allows me to publish my concepts and ideas. Cheers! Tim
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