More Upside in Gold?

03/03/2009 11:46 am EST

Focus: ETFS

Michael Paulenoff

Consultant and Publisher, MPTrader.com

The gold and SPDR Gold Trust ETF (GLD) markets have not provided much in any sort of hedge in the past week or so. However, looked at from a relative strength perspective, the enclosed chart pattern of the GLD clearly remains the inverse of the major equity market ETFs.

Let's notice that the GLD has pulled back about 7% from its February 20th high, but has not inflicted any damage to the underlying chart structure. In fact, the GLD has pulled back to its mid-February upside break point, in the vicinity of 90.00-91.00, which thus far has contained the selling pressure. From a near-term perspective, the GLD will have to press and sustain beneath 87.50 to begin to inflict meaningful damage to the enclosed uptrend (channel) pattern.

Although my near-term work leaves open a press into the 90.00 area from here, my intermediate-term pattern work indicates that thereafter the GLD should embark on another up leg that hurdles 98.99 on the way to new highs above 100.44.

By Mike Paulenoff of MPTrader.com

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