Commodity ETF

Gold Price Probably at a Major Major Top

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I have been reviewing the gold price charts recently up to the monthly scale charts and I am seeing enough evidence to suggest that gold is about to head downtown for quite a while.

There is a class C (as defined by Alexander Elder) bearish divergence (between price and MACD) on the WEEKLY scale that looks confirmed to me as of today.  Of course the week is not finished yet, but I am sticking my neck out and will say this is a confirmed bearish divergence right now.   The only way the gold price can avoid this class C bearish weekly divergence is by blasting high by the end of this week well above the 1200 range.

Class C bearish divergences are known to be some of the strongest signals in technical analysis according to Alexander Elder.  And this is not a daily bearish divergence, it is a weekly one.  So that means it should have price trend implications for several months.  The divergence formed over an almost 1 year time frame which gives it a good amount of significance.

If you just look at the price one can also clearly see that it has printed a 2B sell signal on the weekly chart which is another bearish sign and can lead to a swift cascade down in price.

The chart below shows the two red dotted lines that define the divergence and also note the blue uptrend line on this log scale chart that shows price close to breaking down through an almost 2 year uptrend.

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SPDR Gold Trust GLD ETF Looks Ready for a Big Move

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The SPDR Gold Trust GLD ETF looks like it is just about ready for another big move.  Some time ago I did a post on why I thought it was prudent to be cautious on gold because there was at least the potential of a bearish weekly divergence developing.

That bearish divergence has failed to play out.  And now the gold market finds itself in a position where the daily MACD is just about to turn bullish and the gold price is compressed into an ascending triangle.  In addition the weekly chart and the monthly chart still look bullish. 

So I have to tip my hat to the bulls here.  The monthly RSI is right into the powerzone and has plenty of room for upside expansion.

As long as the GLD maintains the current supporting ascending triangle structure I think you have to be open to huge upside moves.

If we see any closing prices below 120 in the week ahead then it would change the near term very bullish outlook and could completely reverse my opinion.  But for now I have to say the GLD has everything going for it to the upside and actually an entry right near these levels with a protective stop at 119 seems like an outstanding risk/reward.

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A lot can happen in 8 Trading Days

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My impression of today’s trading action is more of the same.  We are rallying on fumes (lighter and lighter volume) and it is an urgent warning to me that the market can retrace the rally that began on June 8, 2010 very quickly.  I still doubt that the next leg of the decline will start this week, but I suppose one could say that the heavy volume of options expiration this Friday could lead to unpredictable price action.  My take is that we somehow manage to stay afloat the next two trading days and maybe even blast up in one last ‘hurrah’ to close this week strongly higher.  But then next week ought to start down very hard and be relentless if my accelerated bear scenario is to stay in force.

A lot of price action (or price destruction) can take place in just 8 trading days leading up to the June 28th target date.  It seems too convenient that so many have forgotten the 1000 point 1 hour plunge that occurred in May.  I guess I cannot blame anyone as I cannot remember what I had for dinner last Friday either.  But my point is that this market can once again surprise with a speed that is unthinkable to even the most bearish of bears. 

If the June 17 to 25th, 2010 astro aspects are to have any real credibility then this market should start to show us something dramatic sometime next week and into the 28th. 

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I have a bad feeling that the Gold Price will get hit tomorrow

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The gold price is in a very touchy situation right now based on the weekly chart and I have a bad feeling right now that gold will get clobbered tomorrow badly on the employment report.  The daily chart of the SPDR Gold Trust (ETF) shows a recent up move retracement on very light volume.

The monthly price swings are also showing me that we have a sell signal based on volume on the GLD.

There is also a very ominous looking weekly price divergence that is developing which could turn into a confirmed sell signal in the weeks ahead.  I think people forget that gold can be extremely volatile to the down side.  It has had an superb run since the 2001 lows, but like any market nothing goes up in a straight line.  Markets need to build sideways cause after huge spikes upward as a foundation point for the next leg up.

If in the weeks ahead the SPDR Gold Trust (ETF) breaks below the 98 level then it is going to put a serious 1st nail in the coffin of gold for perhaps 2 to 3 years and we could see a 50% decline in the gold price from the all time highs.

This is exactly what happened in the mid 1970’s.  Gold went from 200 down to 100   but then after 100 it shot up to 850 for the final blow off run.   So if we break down to 650 then it could very well be the stopping point before another huge run to 5,500 gold price.  So the question is how many in the gold crowd want to sit through a 50% 2 year decline in the gold price ?  A 2 year 50% decline can be a very painful and emotional burden and cause one to doubt the entire premise of the bull market in gold. 

But a 50% decline would setup up massive cause and pivot for a blow off run to 5000 5 years from now.

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Is it time to go Long Natural Gas UNG and Hurricanes

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I did a post a while back on the long term Natural Gas Futures chart because I was intrigued by the potential risk reward setup going into second half of 2010.  At the time I was considering the possibility that Natural Gas could continue to break down badly again and do a full retest of the mega bear market lows in the 2.5 to 3 range.

But Natural Gas has managed to hold the 4 level and has in the last two months managed to bounce off of that level with a sign of strength and show some conviction.  It appears to now be creating the right portion of the W bottom I alluded to in previous posts.

My sense now is that both Natural Gas and the United States Natural Gas Fund, LP UNG ETF have bottomed for good in 2010 and that we can expect to see a dramatic rise going into the second half of 2010.

The monthly chart of the the Natural Gas Futures contract shows that the RSI level has broken above and through the midrange 50 level after having touched support.  This was confirmation in previous moves out of these large W patterns and you can see where I reference it in the chart below.

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The Crude Oil USO ETF trade did not work out

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I was stopped out of the USO United States Oil Fund LP long trade I mentioned yesterday.  I think Murphy’s low applies here, what can go wrong will go wrong especially when it comes to picking spike bottoms. Crude Oil has moved into an even deeper oversold region and it could still be forming an … Read more

I just went long the United States Oil Fund LP ETF USO

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Going long the United States Oil Fund LP (ETF) USO or the ProShares Trust ProShares Ultra DJ-UBS Crude Oil UCO ETF may be one of the most attractive trades I have seen in a long time.  It looks like it is an outstanding contrary type trade. I already mentioned that I am expecting a bounce … Read more

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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