Yesterday evening I started tracking a butterfly on YM. I made two trades one to the upside for the butterfly pattern to finish and one to the downside as soon as the pattern finished. Two good trades based on commonly understood patterns.
Setup of the pattern. You can see the various legs of the butterfly are proportional.
Following GLD [here]. Looks like we are still in a wave B mess to the upside. Expecting wave C downwards so I can get into the calls. I will also get into the calls if somewhere in the messy chart, we have put in the wave C already.
GLD should find support at the 61.8 retrace and for a Leading Diagonal, at 78.6 retrace. Time is running short for GLD to turn up so I would give only a day or two when the market opens to start working upwards.
 In the earlier post, I called the wave 1 a diagonal. That was based on a quick look at the daily chart. Looking at the 15 min, it is clear that there was no 1,4 overlap. So, wave 1 is a straight 5 waver up.
In my last post on TLT [here], I identified an opportunity offered on Treasuries to the upside. I have not yet changed over into treasuries in my 401k as I want to 'time' the market and get in at a better price. I believe we are done with what looks like a wave 1 to the upside. I am waiting for wave 2 down next week to load up. The daily Stochastic is overbought and should provide a brief opportunity to get a better price.
I have been tracking GE for some time now [here]. Some chart patterns [here] and technicals make me bearish on GE. The butterfly pattern on the weekly I identified earlier is updated and presented on the chart below. As identified earlier, losing the SMA 5 and divergence on daily Stochastic brought about the expected price decline in GE.
The butterfly pattern can bring continued weakness in GE. With the market setting all time highs, GE usually leads into the decline.
The conditions are becoming normal on GE right now. The daily Stochastic is way down with the selling of the last few days. However, the weekly Stochastic is still up in the overbought zone.
Here is one way this may pan out -
The DA leg is 123.6 extension of XA right now. Ideally, we want to see the price touch 127.2 extension of XA at about 24.08 if the market continues to rally in April (I expect SPX to touch 1580s [here]). This should also set a divergence of Stochastic on the weekly chart, which brings weakness at weekly level (long term).
Of course, GE may continue with its current course downwards.
Closed my GLD puts yesterday morning. 60% profit. In the futures GLD seems to have finished a wave A. It should put up a wave B to the upside on market open today followed by a wave C to the downside. I expect the wave C to finish prior to market open tomorrow.
Of course, none of this may pan out at open today and GLD may start rising right away. It bounced off the Bollinger centerline yesterday. I will wait for GLD to break over the recent highs for a long trade.
With a LD, the wave 2 retrace is usually pretty deep. I am looking for 61.8 retrace at around 153.31 or so at least.
GLD seems to have put in what look like an LD or ED. Can't say which, though I am bullish gold overall. For the next couple of days GLD may see some weakness. I purchased puts on GLD that I plan on closing by Tuesday/Wednesday. From the chart below, I am hoping/expecting a wave 2 down and then start of a wave 3 up.
Stochastic is ready to turn down and the GLD lost its SMA 5. Both should bring weakness in the near term, up to 5 days, that I expect to exploit with the puts.