Gold Market

The SPDR Gold Trust GLD ETF should have been up 100 dollars today

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One would think that with the major headliner news today regarding Goldman Sachs and the SEC you would see the gold price spike 100 dollars higher?

But no, the SPDR Gold Trust is singing its own tune and trading with a one track mind typical of gold.  2 steps forward, 1 step back.  Repeat. Rinse. Cycle Again.

But here at BestOnlinetrades we could care less what this headliner news is.  Trading off of news most of the time is a bad idea.  Sometimes there are exceptions to this rule, but what I have found is that most of the time one is better served to just trust the charts and the indicators (and the tape action!) as best you can because they are not in the habit of lying.

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This may be the most amazing gold chart I have ever seen

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You really need to study this long term gold mining stock index chart.  It was sent to me by a buddy of mine and the chart was made by one of the regular blog posters over at www.jsmineset.com . 

It is a super long term gold mining stock index chart that goes all the way back to the 1920’s.  What absolutely blows my mind about this chart is that it shows that the GOLD MINING STOCK sector has still not really even had a breakout from the trading range that began in 1980 !!!

This is an amazing chart!

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SPDR Gold Trust (ETF) warming up for a big move

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I suspect that a big move is coming in the gold price and the GLD ETF (SPDR Gold Trust).  Today gold behaved extremely well in the face of the first general stock market decline in over a month.

It could very well be that the gold price will begin to trade with relative strength to the stock market as the stock market is extremely overbought right now.  In fact I would not be surprised to see the stock market start to head south for the long awaited correction and then see the gold price zoom higher totally ignoring what the stock market does and even using a decline in paper assets as more fuel to the fire.

The daily and weekly charts on the gold price look outstanding and I continue to believe that right now…

Gold and Gold Shares are Much Better Risk Reward than the General Stock Market right now!

The reason for this is simple.  Gold has been in a corrective phase since early December 2009.  This is a long time by trading standards no matter what security or index we are talking about.  This consolidation time for gold has put it in a position to head higher regardless whether or not stocks keep going up or start a correction now.

The gold price has led the way in breaking out to new all time highs and the stock market has LAGGED the way trying to catch up to the gold price but so far not even coming close to achieving it.

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Time for a Change in Trading Strategy Towards Gold and Precious Metals

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I am a bit frustrated with the stock market indexes right now.  In fact to be honest with you I am sick of them.  There are still opportunities on the long side on plenty of individual stocks (Las Vegas Sands Corp is one of them), but in my opinion it is too late to jump into the long side of any indices, even if they do go to 1200 to 1250 on the SP500.

Where is the risk reward ?

The risk to reward ratio on the indices right now seems like it is close to 2 to 1.  Two ounces of risk for every ounce of reward.

Now as far as the short side of the market and the inverse ETFS such as the Direxion Daily Small Cp Bear 3X Shs (TZA) ETF, it would seem that this inverse ETF still offers some good risk reward to the upside.  But the problem is that today’s close in the indices was still more of the same.  Inching higher like slow water torture 1 point, 1 day at a time for the next 30 days.  That trading dynamic can go on for a long time and to be honest I don’t know when it will stop.

So that means that despite the apparent  good risk reward in the inverse bear ETFS, unless they start performing from the get-go next week, it will be more of the same as their inverse dribble down relationship mirrors the dribble up move of broad market indices.

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The Gold Price is Behaving Badly Again and May Turn Very Bearish

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The Gold Price is not inspiring that much confidence right now.  The US Dollar Index got a huge breakout going and gold seems to be shying away from the recent range.

I indicated in my previous post on gold that a move above 114 was critical for me to start jumping up and down and get on the gold train again.  Otherwise there would be risk of bouncing around in a tiring dangerous trading range.  That appears to be the case now and it is important for the GLD ETF to hold 105 level as it would help to create a clean looking head and shoulders bottom formation.

If it breaks the 105 then there is a risk that the GLD wants to continue to break down in a confirmed A-B-C down taking us to perhaps the 100 level.

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Another Potentially Huge Trade Developing in Gold or the GLD or DGP ETF

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It is time to start paying serious attention again to the gold market and the gold price.  One of the things that fascinates me the most about markets is their ability to get people to essentially ‘fall asleep’ and basically forget about the previous excitement that was in full force.

The excitement I am referring to was the persistent run in the gold price towards the 1200 range.  That was a huge move and a very nice persistent move.  But since that early December 2009 high, the gold price has drifted sideways to down and held up remarkably well considering how strong the US dollar rally has been.

But once again I think the GLD and the DGP are worthy of close monitoring.  More specifically the GLD breaking above 114 would be for me a key event and signal that the gold price wants to get another big move towards 1400.  But the GLD ETF must be able to get above 114, otherwise it could drift sideways for another month or so to complete this consolidation.

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I am starting to get very Bullish on the gold price and the GLD and DGP ETF

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The gold price has a habit of doing these long slow consolidations and putting everyone to sleep when they should be sitting on the edge of their seats eager to buy with both hands.  It also seems to get the beginning of big moves going on slow days of the week (Friday or Monday or near holidays) when a lot of people are not paying as close attention as they normally would.

I am bringing up the GLD ETF again because if the GLD is able to trade with a full price bar above the 114 level then in my opinion it warrants a confident move into the bull camp again.  However anything below that is still too risky.  Gold also has a habit of rallying up to previous swing trading ranges and then falling apart.

So 114 and higher on the GLD tells me it is time to jump in with both feet into either the GLD or the DGP ETF (the gold double long ETF).  The condition is that the GLD must continue to hold above 114 from there onward.  If the GLD is strong enough it will hold above that area and any pullbacks will be slight enough to keep it from falling under the 114 again.

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