The Gold ETF Train Is Gathering Steam Again (NYSE:GLD)
August 16th, 2010
The SPDR Gold Trust ETF ETF (NYSE:GLD) closed today above its previous major spike peak high of the 12/2/2009 and 12/3/2009 period. This is significant. Volume was seriously lacking the (NYSE:GLD) ETF today however, but still we must give it credit for a solid close near the top of the range.
The (NYSE:GLD) ETF has now positioned itself to enter once again a zone of minimal previous price resistance. This is very important because previous price resistance can be like quicksand, hindering ease of movement in price.
Gold is trading with the Relative Strength Index well above the mid 50 range and in bullish territory. A move into the powerzone above 70 could lead to possibly explosive topside moves.
The gold price seems to be ‘the trade’ right here and now. It has a huge almost one year cup and handle pattern, the handle of which seems to be finishing now. It does not have a messy sloppy extended trading range like the stock market does. So why still the obsession with the stock market? You probably already know the answer. Because of the still astonishingly huge number of stake holders with a vested interest in pumping the market up. Needless to say it is not working too well. The stock market is in a wide swinging trading range with no real trend.
If we assume that the gold price will blast higher to 2000 during the next 6 to 12 months and that the Dow Jones Industrials would stay at 10,300 then it would put the ratio at about 5.00 which is right at the bottom channel line of the 100 year Dow to Gold Ratio Chart.
If the DJIA were to decline from here it would change the movement of the ratio of course but this chart is definitely one to keep in mind assuming gold can get to 2000. This long term chart suggests that the 2000 range of the gold price is an ideal major pausing point for the gold price. Perhaps it would lead to that 50% correction in the gold price I referred to in a much earlier post.
by Tom, best on line trades dot com
