Tuesday, July 12, 2011

MarketWatch: GLD

Gold might be setting itself up for for a pullback to its 100 day moving average at about $145. Take a look at the two spikes near $155 area, the first back in April, and the second at the close of trading today.

On April 29 the GLD traded down from $152.39, to $143.47 on May 5. From there it traded sideways two months using $145 as support. You can see where it spent one day under $145 in late June and then using it's 100 day moving average for support has rocketed back up to its 52-week high. Today the GLD closed at $152.77. What happens here will be important for the GLD. If it stays above $155 then it will be in blue sky territory and very likely attract new buyers to propel it higher. However if it falls back from $155, then that level will set itself up as a double top which would be serious resistance right here.

So, which way will it break? I am only guessing, but judging by the stochastic which is pegged near hundred and rolling over I would say a pullback is near. I don't think it will be as severe as the crash in the SLV. But I can see an orderly decline all the way back down to support at $144. That's a $10 decline. I'm still not sure it's worth short. The reason is because you can see the volume picking up, going over 20 million shares traded. You usually like to see the volume falling off before shorting into the end of a run.

Nevertheless if all of that plays out the $145 zone might be a good place to pick up even a full position. The reason is that if $145 turns out to be strong support in the future then I expect GLD to trade sideways above that level before making its next move up later in the summer.

1 comment:

Anonymous said...

good post, very helpful, thanks