TLT, the 20+year treasury bond ETF, has suffered a severe correction taking it from 91.80 on 12/1 to 88.06 on 12/28, breaking the rising support line shown above in light blue (click on chart to enlarge).
Is the bullish case compromised? Tough to say. I personally exited my remaining long position yesterday 12/29 upon confimation of that break. However, I am looking to get back in should TLT stabilize around this level or a little below and it's easy to see why on the daily chart:
the nearby 87 level should act as serious support, having repelled the previous down move (10/23) and more importantly containing the upward turning 200-day moving average (dark blue line).
Stay tuned!

An update on GLD.
Shown above is the daily chart as of December 28, 2006 (click on chart to enlarge). We are at a critical juncture and for those of us who are long, partial profit-taking is in order.

My preferred interpretation of the technical picture is as follows:
The entire consolidation from the 5/12/2006 all-time high of 72.26 is an ABC correction as indicated on the chart. The bullish case established with the decisive break of a falling trendline on 10/30/2006 is therefore alive and well and the 12/1/2006 high at 65.55 is but an intermediate high on the way to a test of the all-time high. A break of the 65.55 high would confirm this scenario.

I would be lacking in intellectual honesty if I didn't mention an alternative scenario also alluded to on the chart above:

In that scenario, the 12/1/2006 high would be point D of an ABCDE correction. The area I circled in red could actually be a Head and Shoulder in the making with the right shoulder being spawned at this very moment. This scenario would come into play should GLD break the 12/18/2006 low of 60.65 (incidently a hammer). Should that happen, GLD should then test support at around 55 before rebounding and resuming its bullish progression at a later time.
Stay tuned.

Ok, with a few more days under our belts since last entry, it is now safe to assume the GLD move was not a false breakout. GLD not only stayed above that resistance falling trendline but kept inching up as one can gather from studying the two charts above, respectively the daily and weekly GLD charts as of today's close.

(To have a better look at the charts, click on them twice)

On the weekly, it is also clear that the 14-day RSI bounced off the 40-50 band and crossed above both its 5- and 20-day moving averages as well as above 50. That 40-50 band is often a good spot for the RSI of a security in the midst of a bull market (as GLD most decidedly is) to bounce off and signal another leg up.

The next test and a good spot around which to take partial profits would be the previous high of 66.42 reached on 7/14/06. I wouldn't bet against that level being merely a stepping stone to bigger and better things.

Possibly a momentous day for GLD, the gold ETF.

After months of consolidation since the all time high 72.26 reached on
5/12/06, it gapped up today above 60 and in the process broke its falling trendline (shown in light blue on the chart).

Add to this the fact that it is right now above its 200-day Moving Average. And just to be cute, I could point out that the 14-day RSI has crossed over 55 which was a resistance of sorts.

Naturally this could be a false breakout. So we'll have to see what happens in the next few days.

But all in all not a bad spot to start nibbling at gold or slightly increase one's gold exposure.

Click twice on the chart above to enlarge.

9/25/2006

I finally have an update for the TLT trade/analyis. The conclusion first: take partial profits. Which in my case means get out of the position on Tradestation (short-term horizon) but not on Schwab (longer-term).
Here’s the daily chart:


(Click twice on the chart to enlarge)

It looks like an exhaustion gap. The RSI is at 80. And finally 90 is previous resistance dating back to 02/14/2006 (shown in the weekly).

Longer term, as you can see in the following chart, the potential for further gains is still there, with the RSI still rising and not yet overbought. If the 90-92 resistance band is overcome, further upside to 96 is possible.

Here’s the weekly chart:

I've been keeping a 'trading journal" for a couple of years now. I jot down trading ideas, some well documented, others less so. Sometimes, I digress and write about something else altogether. I started this journal mainly for the benefit of my CMT sponsors, to kind of show them my trading thought process. For those who have never heard of it, the Chartered Market Technician designation is given by the MTA (Market Technicians Association) and is usually associated with proficiency in Technical Analysis and financial markets analysis in general. To obtain the CMT, one must, on top of passing three fairly involved exams, have a least 3 years of professional experience using Technical Analysis and be sponsored by 3 CMTs who would base their recommendation on one's body of work. Why would an independant trader like me want such a designation? Well, because it's an excuse to learn more and frankly, they really are proficient.

To make a short story even longer, I kind of started enjoying this writing exercise and I guess the next step nowadays when one writes anything is to blog whatever it is that one is writing. It doesn't even have to be good or interesting, just blog it.
So here is the latest entry in my journal which will become this blog's first entry. It's a week old but it's a long term play so it shouldn't matter.

TLT, a fairly popular ETF, is basically a proxy for the 20 year treasury bond. It could be one of the contrarian plays of the year as very few people would recommend this trade on the long side. Fundamentally, it appears that the US economy might be slowing down a lot faster than anticipated, forcing the Fed to put a stop to its rate hiking campaign even as inflation paints an increasingly alarming picture. Should the economy make a hard lending, the Fed might have to start cutting rates before long, causing long-term rates to go down and consequently TLT to go up. At least that's my take on the fundamentals with the caveat that I am a technical trader. In my experience though, the technical picture always looks better with the proper fundamental background.

Technically, here's the daily chart for TLT as of 08/07/2006:



(Click on chart twice to enlarge)

As one can see, we are still technically in a long-term downtrend, with TLT trading below its 200-day simple moving average (blue line) which is itself downtrending. However, a few clues point out to a potential trend reversal. First, on 07/05/2006 TLT successfully tested its 05/12/2006 low of 82.56 by going down as low as 82.95 before rebounding and forming a doji. From that point on, we've been in a confirmed short-term uptrend, taking out the June high at around 86 in decisive manner (a gap above it on 08/04/2006 on higher than average volume). We could be witnessing the beginning of a long-term uptrend. A confirmation would be for TLT to move above and stay above its 200-day MA. Here at around 86.3 would be a good entry point for a trade betting on exactly that. With a trailing stop below the 50-day simple moving average (84.8 at this time) and an unlimited target for now, we would have a favorable risk/reward profile.