It’s been awhile since we posted about GLD. When last we mentioned it, we were of the mind that the ETF was headed down. Turns out we were right… yeah, yeah, yeah of course it was luck… or was it? At any rate, there’s a lot of talk about Double Bottoms and such here off Support (the yellow line). It’s possible of course, but we like it when probability is more favorable. In our opinion, that is more likely when we trade in the direction of the prevailing trend. Here, the trend is down, support notwithstanding, so we wouldn’t be interested in a long here.
Still, we recognize countertrend entries can be powerful when taken correctly. So for those interested in said entry types, have at right here… it’s a perfectly reasonable countertrend play as long as you keep your risk tight. That means placing a stop just below Support. And don’t be an idiot… if your stop gets hit, it gets hit… you can re-enter or leave it alone. But what you can’t do is “give the position a little room.”