Retail sales climbing spurred more talk about the Fed raising rates sooner rather than later, pulling down equities today. The Dow Industrials lost 61 points on above-average volume to close at 16,987.51. The S&P 500 Index was off .60% while the Nasdaq Composite fell .53%. Treasury yields continue to soar.
UVXY, the leveraged VXI short-term futures ETF, rose 4.52%. SRTY, the leveraged short 20+ year Treasury Bond ETF, gained 3.14%. DUG, the leveraged short oil & gas ETF, climbed 3.00%. Please click on the symbols for details.
GLD has been in a downtrend for three years, peaking in September 2011. Should GLD fall below 113, it’s going to be Katy-bar-the-door time. Using the all-time high and low for the ETF on a monthly chart, GLD pulled back to about 114.50 in June and December of last year (horizontal blue trend line), just one point above the 50% Fibonacci retracement level (red line). Just a skoosh above that is a long-term rising trend line, currently around 116.50 (rising black trend line). The 50% Fib. level is 113.44 . So you can see there is significant support in the 113 – 116 range:
With GLD currently at 118, one way to play this is by placing a buy order somewhere in the middle of that range. Another way is to place a buy order at the top of the range but with only one-third or one-half of a normal-sized order. Buy an additional round of shares in the middle of the range and perhaps a third round at the bottom of the range. Should GLD start trading below 113, get the heck out of Dodge. If you get filled and GLD stabilizes, you may want to take some partial profits should it climb back to the 38.2% retracement level, around 130.50.
If 113 fails to hold it’s likely GLD will test the 61.8% retracement level (not seen in the chart), around 96.35.
I’m far from an experienced Elliott Wave practitioner – I know just enough to be dangerous – but it seems to me that GLD is in a Wave 4:
If that’s the case, GLD may find support between 113 and 116. How so? Under Elliott Wave theory, sharp corrections tend more often to retrace 61.8% or 50% of the previous wave:
As you can see, GLD has retraced almost 61.8% of Wave 3. So does this mean you should start loading up on GLD? I’m afraid my crystal ball is in the shop this weekend so I can’t answer that question.
I’ll update Subscribers Only! on Sunday. Enjoy your weekend.