The gold price as represented by the GLD ETF is flashing a huge warning signal right now and is in a stance that suggests it wants to get a MASSIVE upside breakout during the next 10 trading days. If I am correct then the ideal exit point for any precious metal related trades could be right on the opposing days of that weekend of October the 18th.
I would not be surprised to see the gold price literally zoom up 100 to 200 dollars to 1200 during the next 10 trading days or perhaps even to 1400. The structure of the chart still looks very bullish to me. The only possible fly in the ointment is the US Dollar Index. It is clear that the US Dollar Index is extremely oversold and at risk of a huge upside bounce from the falling wedge formation it is in. So the confusion from my view is counting on the gold price to rally in the face of a upward spike in the US Dollar Index. My take is that this could be possible for a short period of time in the face of a real stock market panic.
Part of the reason why I am expecting such a move is because I am expecting the exact OPPOSITE event to happen to the stock market. There still exists the possibility of some type of stock market crash over the next 10 trading days going into the weekend of October 18th. If that occurs then it would be a clear sign of panic and fear and gold could benefit from this panic in the form of a massive upside breakout.
Right now the broad market is rallying again and once again on low volume relative to the last week declining volumes. The risk to the broad market right now is on the downside. Whether we get a crash or not remains to be seen but all the data and charts I have looked at over the last few days suggests that there is a good possibility of one going into the 18th October weekend.
I continue to recommend the TZA ETF and if I am correct on the severe downside that should occur into the 18th of October, then tomorrow Tuesday may offer a superb entry point on the TZA because there may be some more upside follow through on this Monday low volume rally in the broad market that would set up the perfect sell signal on the broad market and superb buy signal on the TZA.
So in summary I continue to believe that the broad market will be pulled down like a magnet into a panic low either on the Friday or Monday opposite the weekend of October the 18th, 2009.
The only longs I am considering now are gold and inverse bear ETFS…
The next 10 trading days has the potential to be the most exciting stock market and precious metal price action we have seen since the ‘preview’ plunge of October 2008 ! The price action over the next 10 trading days may be even more wild than during the 2008 period.