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Wednesday, August 22, 2012


Nice moves up in both GLD and GDX lately.  I thought it was time to revisit the charts.  Here is the weekly GDX chart first.

I put in a couple of resistance lines at the bottom of the top formation from last year.  I circled the lows the lines are based on to make it easy to understand where they came from.  That is a very sloppy top and there could still be resistance above the top line, but I think this is a good place to start and I will address that should be get up to the top red line.  We have a clear break of the 18 SMA and green bars.  Lets zoom in to the daily chart.

Price has cleared the 100 SMA and the top of the Keltner channel.  However, it does have a blue bar indicating it is above the upper Bollinger band.  Price is also pretty extended from short term moving averages.  A pause or pullback seems likely soon.

Lets see how GLD is progressing.

Price has cleared my upper resistance line, but like GDX we have a blue bar.  Will it be able to stay up there?  It has had a tendency on this chart to go back and fill in gaps.  I don't know if this time is different or not.

I have heard much chatter about the FED doing another QE program.  It seems that many people were expecting it at the last meeting.  When that did not happen they now say it will surely happen at the next meeting in Sept..  I really do not think that is going to happen unless the market crashes between now and then.  How much of this price move is based on new QE?  I think that is a very hard question to answer.  If the FED does not do QE will that disappoint the market and send gold back down?  I don't know how to quantify that risk or if that is even a risk at all.  GLD has not done enough to say it is now in an up trend.  That means it is still somewhat vulnerable to the down side until we get more evidence it has likely resumed its uptrend.


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