Monday, August 13, 2012

Gold: Just What I Was Hoping For

Gold has been stuck in a really impossible situation, at least as far as my understanding of the True Strength Index (TSI) indicator is concerned. It has been marching higher, nearly reaching $1630 yesterday, with no hope of getting but pennies further. The problem has been that on this rally the TSI had no where near the momentum of the previous rally, yet price was flirting with making a higher high. In technical jargon, gold was just dimes from sounding a negative divergence SELL signal.

The only workaround to this unfortunate technical situation  was for gold to face the inevitable.......and that is, of course, trade lower. With this afternoon's late sell-off, the TSI has mercifully dropped creating the set-up I have not only been expecting but anticipating with delight.

As of an hour ago, gold has a new TSI high sitting right under last Friday's candle. This gives us, along with the TSI high of July 30, the ideal buying setup - namely a trend line break BUY signal. The trend line break signal effectively trumps (eliminates) any divergence signal otherwise in place.

What should happen now is when gold gets to feeling peppy again it will shoot back up and drive the TSI reading up through the newly created trend line (green). It's like getting a reset on the shot clock and I plan to be a buyer when I see it happen.

School starts in a week. Don't even think about asking me how I feel about that.

OK gold, do your little sell-off thing and scare the mice back into their holes so I can buy something at a really good price later this week. Please!

Best wishes,



  1. That looks pretty good John. Just curious do you have a pretty fast computer? I get a lot of performance errors especially during high volume times running thinkscripts.

    Also if interested I figured out a way to send out emails on custom alerts(a feature that should be included in Thinkorswim) but only up to 3 specific alert emails using the alert sounds.


  2. Great work John,

    Gold futures are looking scaring rigth now, have you got a price in gold that must not be violated to resume this uptrend?

  3. you mean you are a buyer when gold breaks above 1630? Would you buy a little pull back or simply wait? M

  4. Hi Monty - I do not think in terms of price numbers - like 1630.
    I do think in terms of TSI BUY/SELL signals. As of this weekend,
    gold has not given a new BUY signal and is stuck beneath its 200 dma.

  5. Thanks Josh - I have looked at the TOS email capability recently and see how it is done. But deferring to the real expert on Think or Swim coding, Eric Purdy at, I am told the execution of this capability is not terribly dependable nor necessarily expedient, unfortunately.

  6. Not sure what you mean as there is no capability to send out emails from alerts generated in thinksript strategies. What I do is split the audio out of the output to the speakers and the other to the mic input on the same computer. I found a program that when it detects certain frequencies it will send out an email. The limitation is I could only get 3 of the 4 alert sounds to work which is fine for me now as I only trade ES and 6E. It works pretty good and I get the email within 1 min but I will eventually look to switch from thinkorswim to some other program that supports this feature as I find it really useful.

  7. Josh (rckt) - you are a very resourceful guy!

    And as best I can tell, TOS indeed does NOT provide the capability to have emails sent
    when a study trigger is fired. It appears that they used to - in 2009 - as many many Google
    links take me to *their website* where that claim is repeatedly made. Several other website
    links affirmed this capability, but I note the date of these posts are dated.

    Well, here is something to look at. Apparently there is a way now to do all kinds of things
    with TOS using MSExcel - and in *real-time*.


  8. Thanks John. Very interesting. That looks like it could be a lot better than what I'm doing. Just got to find the time now to learn visual basic.