When do I say a stock is going up? When the stock is making
higher highs and higher lows, then we can say it is going up. When is a stock
going down? When it makes lower lows and lower highs.
It is normal for traders to take profits when a stock gets
overbought, which causes some selling leading to a small decline. Buyers come
back after a decline and push the stock back up, achieving the higher high and
higher low. I believe GLD is starting to
do that. It just crossed its previous high, and a likely scenario for me is now
to wait for a pullback to enter GLD.
I use shorter cyclical indicators (see the black line in the
lower chart pane) to tell me the extent of pullback. It is impossible to time
it perfectly but after about 6 days of consolidation and pullback, the black
line on my chart drops below 20 and that is usually a good place to look at re-entering.
Using a buy stop order, above the previous day’s high is a nice way to enter.
What that means is that I would place an order to buy GLD if the previous day’s
high price is exceeded. That denotes a strengthening in the stock.
This is what I will now patiently wait for, and hope GLD
does not run away on me!
Meanwhile I have had an exit signal on the Dow
Jones 30 ETF known as DIA. This is a good time to cut back on positions and
back off, and only re-enter when the down signal high is exceeded or when the
system flashes a buy signal. Gold is often used as a hedge against market
declines. Bond funds are clearly not working as a hedge against market declines
anymore since interest rate hike fears are bringing bond funds down. I am
completely out of bond funds and have been for a while and anyone reading my
blogs can go back and see when I posted those exit signals….
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