Gold Market

What I saw In Gold and the SP500 Today

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The SP500 closed right near the highs today but the volume was lousy.  I have to say this is a pretty amazing accomplishment given that it is a lazy Friday right before a 3 day holiday weekend.

The gold price also barely pulled back today and managed to close slightly positive on the daily basis.  This is a very bullish sign on a near term basis and says to me that the gold market could get some significant continuation next week.  The longer we hug the recent highs without pulling back that much, the more bullish potential we have for the long awaited break over 1000 !

But there is talk that the broad market is supposed to tank big time next week. I can see this as a possibility when I consider the huge downside volume that we had 3 days ago in a serious sign of weakness.  Yes we bounced higher today and closed right at the highs but it was on barely any volume.  It was all smoke and mirrors.

But I do have to respect the fact that we bounced off of support and now are bouncing back topside.  It just seems like the bears should have been able to accomplish more downside this week but they couldn’t get it done.  If they can’ t get it done next week then it could very well be that we are headed for more super bullish upside prices.  In a previous more longer term post on the sp500 I mentioned a scenario where this could be possible.

If this market is going to get a serious downside correction then I would think we get a gap down on Tuesday in the AM and then just slide down from there.  If we are still drifting around next week, then I am going to become more and more skeptical of the ‘super duper correction’ in September scenario.

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Spot Gold Does a Nice Upside Continuation Today

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The spot gold price did a similar move to what occurred yesterday and without much help from the US Dollar.  The dollar continues to linger around and trade flat while gold seems to have a mind of it’s own.

The significant technical event that occurred today (at least in spot gold) was a piercing and close above of the longer term down trend line in force on the spot gold price since March of 2008.  When we look at the GLD ETF, we had similar upside volume to yesterday.  So the longer term bearish down trend line was attacked with a significant volume surge and also pierced.

This is good news for the bullish case.  But what I would most like to see in spot gold is a full price bar above this longer term blue down trendline to show me that we have officially cancelled the bearish trend in existence since March 2008.

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The Gold Price Initiates Breakout from 30 Year Cup and Handle Pattern !

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GLD20090902

I am only going to do one post today and it is going to be on the GLD ETF because I want to emphasize how important a day it was today in the gold market.

Today we broke out north from the large symmetrical triangle with confirmed volume and confirmed sign of strength.  The triangle formation has been developing since February-March 2009 time frame.  This is quite a large triangle and has significant cause for an extended move.

But there is even better news.  This symmetrical triangle also makes up the right shoulder of the much larger head and shoulders bottom formation that has been in existence since March of 2008.

And there is even more better news.  The entire head and shoulders bottom formation of approximately 1.5 years in duration is in itself the handle of a super large cup and handle formation which is 30 years long.

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Today was an Absolutely Huge Day for Gold

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gldetf20090901

Today was a huge day for gold and the GLD ETF in my opinion!  Gold got a nice bid today and held firm.  I consider it to be a possibly pivotal day for the gold market for two reasons.

The first reason is that despite the broad market break down today, the gold price (as represented by the GLD ETF) held firm all day and managed to trade up by about .60%.  I hinted about this when it happened a few days ago and could be the early signs that foretell a scenario where the gold price becomes less “co dependent” on the broad market for its direction.

The second big reason I consider today to be a pivotal day for the gold price is because gold was able to trade up today despite the significant US dollar strength we saw throughout the day today.  So we had the broad market down big, the US Dollar UP big and the gold price holding firm and managing to get a nice upside close. 

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Gold Price to Break Out by Labor Day?

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goldfutures20090828

Spot gold has some good upside action today but it is still early and we still do not know how the day will end.  But so far today I am seeing bullish signs and a good possibility of a bullish closing weekly price bar to set us up for next week.

It would be superb if we can get a bullish weekly close going into next week.

I am seeing that the daily MACD has crossed up on the spot gold price for the fourth time since being in this large triangle.  In the near term there is a slight tendency to an ascending triangle formation (green shaded area) in the chart.

Still, the spot gold price has not achieved a move above the 970 to 980 area that is necessary for me to say we are in breakout mode and have much higher confidence that the breakout is for real.

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Spot Gold Price Daily Chart Shows a Double Inside Day

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gld20090825

If you ever want to know what it feels like to be bi-polar, all you have to do is start watching the gold price on a daily basis.  Two days ago gold was up big leading one to believe that a breakout may start.  Then the next day the gold price took a major body blow to the downside.  Then today (at least so far) spot gold popped right back up again.

But this ‘bi polar’ type price action is accomplishing something important.  It is filling in the large symmetrical triangle that has formed in the gold price since the mid February 2009 time frame.  This is a large triangle and has a lot of significance in terms of the amount of of energy that is being built up.

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Gold Market May Achieve 30 year Cup and Handle Breakout Next Three Weeks

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TsarCannon

I continue to get more and more bullish on Gold with each passing day.  The only thing constraining a truly rampant bullishness is this large symmetrical triangle you have heard me talk about repeatedly over the last few weeks.

If the GLD ETF can get above 95.25 during the next three weeks and if the DGP Gold Double Long ETF can get above 21.50 during the next three weeks then I am going to have to make the conclusion that the massive 30 year cup and handle breakout is in full force and we should then get a long term upside continuation breakout of between 6 to 12 months duration.

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GLD Declines Today but on Lowest Daily Volume since Christmas 2008

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gldgoogle

The GLD was down slightly today but the volume was the lowest volume we have seen on the GLD since Christmas 2008.  The volume today was 3.97 million shares.  For the GLD this is the equivalent of holiday trading volume.

This is significant to me for a couple of reasons.

One of them is that it confirms the fact that we are right inside the apex of this large symmetrical triangle on the GLD since February 20th, 2009.  Volume declines into the formation of a symmetrical triangle is expected.  During the entire formation of the triangle, the bulls try to rally price higher and then the bears slam price lower in successive steps each slightly higher and then lower as the pattern progresses.  It is a frustrating pattern because it seems that no significant progress is being made either up or down.

But progress is being made in the sense that significant cause building (energy) has occurred which will eventually see a resolution.  My bias has been for an upward resolution out of this pattern.

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Four Words Today Gold Up Dollar Down

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The US Dollar got clobbered today and gold popped up like a basketball submerged under water.  So far the supposed US Dollar rally is not materializing.  The dollar is trying to rally but it cannot seem to get any real ease of movement to the upside.  It still could, but it had better start soon because it is once again flirting with the critical longer term support line.  The price action today in the dollar looked like a real sign of weakness to me.

Meanwhile the gold price is inching closer and closer to the completion of its symmetrical triangle formation and I am slowly gaining more and more confidence that we are going to see a real breakout from this market come beginning of September.

The dollar index just keeps failing to get a rally going and I am thinking if it keeps failing like this for the rest of August it might turn into a real severe drop in September.  If that scenario plays out then it would help the gold price to finally get an upside breakout above the 1000 range.

Incidentally, if I am correct that we do get a gold price breakout, it will be important that the breakout materializes in the form of wide price spread and blockbuster volume on the upside.  We will have to take a look at the GLD ETF to get confirmation.

I still think this gold price setup has the  potential to be one of the greatest upside setups I have ever seen in my life if I am correct on us getting an upside break.  

21.70 on the DGP ETF ( The gold double long ETF ) is for me the green light signal that the breakout has started to initiate.  The “safer” upside trigger on the DGP ETF is 23.75 or above.

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