Gold rotating between the levels marked in yellow. Selling conviction in red and buying conviction signaled in blue. Current market seeking balance. Fair market value at 1512.2. Gold currently below fair market value but will likely require a geopolitical event combined with a lot of demand to get through the transactions sitting at the 1512 level.
The thesis I posted on October 3 remains in effect.
The above study’s entry signals plot when cumulative volume delta (CVD) suggests countertrend conviction. Since it is not possible to code a study that would mark every inflection point (see “Repetitive Rejection”), one must constantly monitor the auction market process. Within that context and in the midst of today’s widely unexpected rally, our auction market trade plan must now monitor for one of three conditions:
- repetitive rejection (“effort without result”) at 2950 (That would be bearish.),
- a price decline that fails to get bid until falling to recent levels of high liquidity (2935 and 2920) (Given sufficient evidence for new demand, that would be bullish.),
- an initiative at 2950 that indicates strong demand, for which we’ll look to enter long on the downside retest near 2950 (That, too, would be bullish.).
This trade plan is auction-based and predicated entirely upon the time-volume relationship that lies at the heart of auction market theory.
Download .pdf here: Climate Change
Early this morning, I posted a breakdown of Tuesday’s options activity describing the highest activity in long puts. That took place as a campaign (see above) and started when gamma was at a nadir. Size was at the 287 strike and so those are the ones to watch in the next few days. If the market falls below the 287 strike, the gamma will accelerate gains.
Also, I had “predicted” that yesterday evening we’d see a DIX below 0.40 …which has been shown to correlate with selling …well, that came tonight. One day early on that call.
While you can get a good idea of where the balance of trade is, using options data …watch this call, this morning. Someone must have thought something as simple as, “Hmmmm, lots of pessimism in the market …these calls are really cheap …gamma would work for me. Why not?” Overnight, China announces their openness to a trade agreement.