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Friday, September 7, 2012


It has been a while since I have posted about these stocks.  They have progressed quite a bit.  Lets start with the weekly GLD chart.

We have blue bars on the weekly, so price has gotten above the upper Bollinger band and is extended.  It has broken the down trend line though.  That should be longer term bullish.  Lets zoom in to the daily chart.

Price paused a few days at the down trend line, but did break through.  Today ended with a shooting star candle stick.  After a big move up like this, that is likely to cause a pullback.  A successful test of the down trend line from above would be nice confirmation of the trend turning back up. 

Here is the GDX weekly chart.

You can see from the top formation where I put in the resistance lines I have had on the chart for a long time.  Price is just now touching the bottom of the zone.  Notice the weekly 200 SMA is in this area.  Lets zoom in to the daily chart.

Along with the resistance zone, the 200 SMA is also in this area.  In http://traderbob58.blogspot.com/2012/07/gld-and-gdx.html  I wrote this back in July.  "This does look like a decent shot at making a low that could test up to the 200 SMA which is around 50 now."  We are here.  I don't understand the fundamentals that caused the big crash in GDX with the gold price where it is.  Therefore, I have no idea what happens to this thing from here.  Just looking at the weekly chart as if I knew nothing about it, I would say this looks like a corrective move.  That top took almost a year and a half to form.  It is a little hard to say this move up has fixed all that.  We could end back testing the low again.  However, GLD has broken its down trend line.  What happens to GDX if GLD has really resumed its up trend?  Are miners fundamentally broken due to mining costs or something?  I am afraid I don't know enough to figure this one out.  Short term traders might want to think about tightening stops or taking some profits.  You longer term people are on your own on this one.

What I don't know about GLD is how much of this move is based on the prevailing opinion that more QE is coming from the FED or what time frame it is expected in.  I don't believe that will happen before the election unless the stock market crashes.  Although Bernanke has talked about the FED being ready to do something if needed, he has talked several times about the risk of new QE.  The Dallas FED even put out a paper on the subject.  There was very little talk at all about risk in 2010 and none at all by Bernanke that I can recall.  I think the bar for new QE is much higher now with the way food and oil prices jumped after QE2.  I don't know if anything bad is going to happen to either of these stocks if no new QE is announced next week, but I think there could be some disappointment.


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