George Maniere: Every day I open up StockCharts.com and I redo every one of my holdings. By doing this I am able to be conversant in every stock I own. This morning as I was redoing the SPDR Gold ETF (NYSE:GLD) and I noticed an eerily familiar pattern that had developed at exactly the same time last year.
The people that are my regular readers know that I like to play nice in the sandbox so in fairness I will say here and now this is not last year. Most telling is that we have been theoretically taken off our medicine of Quantitative Easing. The dumping of 30 million barrels of oil onto the market was a form of quantitative easing and the fact that we will be buying more treasuries with the interest that is earned from the maturing treasuries is also quantitative easing. The blatant printing of fiat money has been ended – at least for the time being. It will be interesting to see if the patient survives.
As the chart below will bear out the latest gold price action is strikingly similar to the pattern that unfolded at precisely this time last year. The reason I want to alert my readers to this is that if this pattern holds true again, it will provide traders with a good road map and price targets for trading gold in July.
What I am finding very interesting is that there seems to be a clear pattern now repeating itself on the gold charts that developed exactly one year ago.
Let’s take a look at the pattern a year ago, compare it to now and over the next few weeks. By doing so we will see if the future pathway of the pattern plays out as it did back in July 2010.
First, take a look at the chart below. The chart clearly shows a broad picture of a repeating pattern of price swings.
Notice how in April of 2010 we had a move up (1) followed by a small correction (2). Then we had a substantial move to the upside (3) followed by a correction of about one half of the previous move up (4). This was followed by another nice move up (5) followed by a substantial correction back to the level of the first correction (6).
Now let’s take a look at the exact same time period in 2011.
A look at the chart will show an eerily familiar pattern that has developed. The only X factor will be the final leg downward. If this final leg corrects back to the 150 day moving average, as it did in 2010, we will have a good indication of what to expect from GLD. Look at the chart. The signs are all there. If leg 6 pulls back to the 150 day moving average the RSI, the MACD and the slow stochastics will all be exactly where they were in 2010. Trust your Charts!!!
Related Tickers: SPDR Gold ETF (NYSE:GLD), Market Vectors Gold Miners ETF (NYSE:GDX), iShares Silver Trust (NYSE:SLV), iShares Gold Trust (NYSE:IAU), Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), Goldcorp Inc. (NYSE:GG).
In 2004, after retiring from a very successful building career, I became determined to learn all I could about the stock market. In 2009, I knew the market was seriously oversold and committed a serious amount of capital to the market. Needless to say things went quite nicely but I always remebered 2 important things. Hubris equals failure and the market can remain illogical longer than you can remain solvent. Please feel free to email me at [email protected]