Will Gold Price Get Compressed?
Commodities / Gold and Silver 2010 Mar 16, 2010 - 04:09 AMBy: Bob_Clark
We go into a Fed week sitting right at the highs made a couple of months ago in the S&P. It should lead to a couple of more days up. Monday is stacked with data in the AM. Some of it should be market moving.
I looked at the long term picture on the SPY earlier in the week. Today I will look at GLD..
US$...no chart..we sold off Friday to the bottom of the recent range. I look for buying to come in here but keep in mind that the longer term trend is still down. So we have to keep our eyes peeled for a top.
SPY...the data in the morning and the Fed meeting on Tuesday should keep a firm bid under the market..however, this market is way over loved right now, so there are caution flags...I am going to proceed on the bull side until wed. I see the potential for some early selling on Monday the up later in the day or on Tuesday, after wed it gets iffy
XIU...I am going to buy xiu if we get a nice sell off into the 17.60 range. I will be using a .05 cent stop...this is an aggressive trade and the gap is a concern as it is a magnet. As in most markets, we have the risk of a failure at this level..
GLD...Below is a five year chart in which I have marked the end of march time where we find ourselves now. I believe the low we made in October of last year is an important low, where a longer term cycle bottomed. The next thing we look for is a one year low sometime in 2009, here it gets a little fuzzy. Was it the low we made in July or did it come in and hardly register in October? If you look you will notice that it often makes a high in late April and the low comes in July sometimes as late as October. That is the trouble with cycles, they are not tradable as a stand alone method. What I want to point out is that in only one year out of the five did we go much below the March low as we fished out sideways into July.
I think we will do the same thing this year because it is an election year and sooner or later Obama will realize he is getting sandbagged by Bernanke and Co., meaning they are not getting the money into circulation. My best guess is that we take one more run at 114 which turns back then the 102 area holds till July, then we get a nice leg up. We are long from 107.80, I want to point out that this is not the best place to trade and is a "just in case" entry should we get a good April rally. Our really safe trade will come in several months. For this reason I am using tight risk management. My stop is at 107.60 on the half I still hold
SLV...For now I think slv may try and mount a rally but it is too high to add to our original buy at 14.45. It should remain under the influence of the seasonal metals pattern as well. The Commitment of Traders data is out and it shows the Fat Boys shorting silver here which makes sense, I will try to get the latest COT charts on my blog in the next few days. I have a stop at 15.90 which I am reconsidering but have no change yet. I think the gap at 16.20 ultimately gets filled.
GDX...I have no trade for tomorrow. All the metals should catch a bid here but it may be fleeting, as I said above I think we will get some really nice trades in the gold Juniors in the summer. As well but there is still the possibility on the upside of something now..see closing comments...
TLT... looks ready to tackle the gap, in yellow..it remains range bound between 88.50 and 92.00. Tomorrow could see some selling but it should be short lived.
I want to point out that the only market that has any direction is the stock market. We have lost the correlation for now. I didn't post longer term daily charts tonight but if you look, you will see we are still in a down trend in the metals and their stocks. The spike lows we made last month may indeed be "the bottom" but I have some things telling me to expect continued selling pressure as well, so it is compression time. Picking at dips is the best strategy for now. As I said, we should stay firm into the Fed meeting. Email advisory for March 14th 2010.
Bob Clark is a professional trader with over twenty years experience, he also provides real time online trading instruction, publishes a daily email trading advisory and maintains a web blog at www.winningtradingtactics.blogspot.com his email is linesbot@gmail.com.
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