What to do after a day like today? Well, dump the GLD historical data from Yahoo into a spreadsheet and see if there are any parallels. The chart and table that follow show all days with a 4% or larger drop.
Here's some observations:
- Blue Squares In Chart - every one of them, at least for a moment, had a point where the price was higher than the close of the one-day hit day sometime in the next 5 days. I don't consider this to be tradeable because I wouldn't know where to place the stop.
- Orange Diamonds In Chart (and Column J) - every one of them except one had a low that was lower than the close in the next five days. I used this to exit my short-term trading positions this evening.
- 2008 Crash - a bunch of these were associated with the 2008 crash. I don't think we are in such a crash so I discount those data points.
- Yellow Triangles And Table Average 5 Days Later (rows 16 and 17) - a little lower than today. So, there isn't a need to panic out of longer-term positions. The worst of the yellow triangles (except 2008 crash triangles) was "only" down another 3.9%.
- Another 3.5% Lower Than Today's Close (that would be $1632) - Every such non-2008 panic case, if bought this far further down from Today's close, results in a gain at the end of the 5-day window (that is, next Wed). I expect I'll be buying for a short-term trade if we get at least 3% more downward movement.
- Feb 27, 2007 - by far the most similar day to today, both in time of year (to the day almost), and the RSI and general chart pattern (see below). It continued to fall another 4.3% (targeting $1617 for this year) and then quickly recovered everything and then some.
This scatter chart has the size of the one-day-drop as the X-axis and the percentage price change from the one-day-drop close over the next five days on the Y-axis.
Here's the current gold price chart:
Here's the 2007 gold price chart. Check out the end of February and what follows. This is the event most similar to today's event: