Gold is really putting on a show these days, in a subtle manner. This market scares people because of the manic price action of the past. This run of the last 6 months has defied past precedent in that it keeps grinding higher and hasn’t broken down in any significant way. It has given a number of head fakes that have shaken loose weaker hands attempting to trade it. The faithful “buy the dips” investors have been rewarded for their intestinal fortitude. GLD is right back knocking on the door of its all time high and ultimately resistance. Support continues to be the 18 day MA, with chart support at Wednesday’s reversal swing low 119.77. Price is hugging the lower line of the pitchfork and once again at the top of the trend channel threatening a breakout.
The Elder Impulse chart is showing a green bar signifying an entry opportunity for longs. The green bar results when MACD histogram slope is positive and price is above the 13 EMA. An ascending triangle is still in play where a breakout to the up side signals a projection target of 130.50. I am increasingly optomistic that this is the likely outcome. Price is butting up against the Bollinger band and providing resistance to the break. In an instance like this, it takes a good bit of bullish momentum to blast through. If that is not in the cards this next week, look for more lateral price movement to allow buying pressure to accumulate. On the other hand, a breakout will quickly lead to an embedded stochastic (3 days above 80) which will signify stregthening momentum. With RSI at a reasonable reading 60, there is plenty of room to run and I believe gold could run $50 or more, roughly $5 for GLD.
The volatility monster that is silver is doing its thing! We are back to a green bar and another entry signal for long trades. SLV smoked through resistance of the breakout price level that has been in place for some time and shot straight up to the bollinger band. Resistance now is now the previuos high at 18.90, with strong support at 18.0 comprised of the previos swing low, 18 and 45 day MAs. RSI has plenty of upside potential. The question has to be asked: will silver de-couple in a similar manner that gold has from the weak economy (deflation) argument and assert its monetary characteristics while ignoring its industrial commodity aspects? If it does, look out, it will light your hair on fire! If it does not, then I believe the deflation argument will provide gravity to limit any breakout.
A similar question must be asked about the miners, will it follow gold and silver rather than the broader stock market? There are signs this is happening, but nothing definitive. Sounds like a “wall of worry” that the market loves doesn’t it? Divergence certainly exists in the chart, look at RSI, MACD, and volume. There is that pesky gap that will most certainly fill short of a complete runaway market. A hyper-inflation would certainly leave this gap unfilled, but at this point seems unlikely. GDX must break through resistance at 54 level in a convincing manner to remove the divergence on the chart. This market, like gold and silver is not providing easy entry points from a technical aspect. My trading has virtually ceased. An ascending triangle is shown on the chart, with a price objective equal to the height of the triangle, or 62! To commit to that trade one better be pretty sure GDX is going to de-couple from the broader stock market!