No love for the yellow stuff - GLD breaking down, again...
While there appears to be some interesting 'value' plays within the gold & silver sector, the underlying commodity is anything but bullish at the moment. Today's rather violent breakdown seems to confirm that notion and is yet another nail in the gold bugs proverbial coffin. Price rallied off the December, 2013 lows rather nicely but that bounce is fast loosing steam.
So, if price is heading lower from current levels, where ought one to expect support to come in? Two technical targets jump out at me going forward (over the coming weeks/months) and I thought I would take the opportunity to post those ideas here today. Firstly, the breakdown through the recent consolidation range confirms a bearish ab=cd price patters which itself suggests a price target near near the 1,160 area. And secondly, there is a rather large price gap (on the Bats trades GLD from December 31, 2013) at that same level. Put these two targets together and I believe we have a solid case for price to revisit that area. Considering too, markets rarely put in long term 'V' bottoms (where they prefer 'W' patterns) a serious test of those lows shouldn't be too unexpected. Once price does get down into that neighborhood it shall be interesting to see how volume and momentum look. If they support the notion of a bottom I shall be watching in earnest.
Is this 'The Bottom' then?
Unfortunately, my 'hunch' is that this bear will continue to grind on. I originally posted an outright 'sell' recommendation on gold back in December, 2012 (wtcsspotlight.blogsp...r-december-21st.html) and that medium term bearish play seems to be working out as expected. I wouldn't be too surprised to see one climactic capitulation down to $1000/oz (or maybe even a little below) before we can start the next leg higher in earnest. You gold bugs will just have to wait a bit longer for the world economy to get traction before inflation fears can start up once again.....
So, if price is heading lower from current levels, where ought one to expect support to come in? Two technical targets jump out at me going forward (over the coming weeks/months) and I thought I would take the opportunity to post those ideas here today. Firstly, the breakdown through the recent consolidation range confirms a bearish ab=cd price patters which itself suggests a price target near near the 1,160 area. And secondly, there is a rather large price gap (on the Bats trades GLD from December 31, 2013) at that same level. Put these two targets together and I believe we have a solid case for price to revisit that area. Considering too, markets rarely put in long term 'V' bottoms (where they prefer 'W' patterns) a serious test of those lows shouldn't be too unexpected. Once price does get down into that neighborhood it shall be interesting to see how volume and momentum look. If they support the notion of a bottom I shall be watching in earnest.
Is this 'The Bottom' then?
Unfortunately, my 'hunch' is that this bear will continue to grind on. I originally posted an outright 'sell' recommendation on gold back in December, 2012 (wtcsspotlight.blogsp...r-december-21st.html) and that medium term bearish play seems to be working out as expected. I wouldn't be too surprised to see one climactic capitulation down to $1000/oz (or maybe even a little below) before we can start the next leg higher in earnest. You gold bugs will just have to wait a bit longer for the world economy to get traction before inflation fears can start up once again.....
