Week Ending 5/8/09
The following is an excerpt from the full market wrap report (35 pgs.) available at the Honest Money Gold & Silver Report website. Stop by and check out our money back guarantee and free trial subscription.
Several commodity groups are starting to act strong: agriculture (DBA), oil (USO), natural gas (UNG) and base metals (DBB) to name a few.
Our stock watch list contains numerous stocks within these groups that are performing quite well. Many of these stocks have been in recent email alerts to subscribers, and I have sold and booked profits in several of them during the past few weeks.
Most of these stocks are presently overbought, however, and I would not chase after them. I am waiting for them to come back to me.
Short term the rally is getting extended and a pullback would be of no surprise, which is why I have been selling and booking profits the past few weeks.
Gold had a good week up $30.10 to close at $916.50 (continuous contract) for a gain of +3.40%. It was gold's highest weekly close in the last 6 weeks.
As the chart below shows, GLD has finally broken above its elusive 50 dma and the upper trend line of a falling wedge pattern (blue). The indicators look good, especially CMF money flows, which have been negative and are now almost neutral. Next we want to see them turn positive.
Looking over the chart a bit closer we can see gold's story over the past several months. Let's focus in on the decline to the Nov. 2008 lows.
From the Nov. low (88.71) GLD began to rally up to its Feb. high (98.84). It then began to correct back down to its 200 dma, which is near the 50% fib retracement level (84). This was all "text-book" action.
I have commented before how gold has been trading within a band that has its 50 dma (89.36) acting as the upper boundary, and the 200 dma (84.25) cast as the lower boundary; providing a trading range of about 5 points.
This week's action broke above overhead resistance at the 50 dma, which is a sign of strength if it holds - suggesting an assault on the recent highs may be in order. On the weekly chart the head & shoulders formation still obtains.
Silver had an even better week than gold, adding on $1.50 or 12%, closing at $14.00.
Silver has now closed above its March high and the next target is the Feb. high at $14.61. If silver holds a two day or weekly close above its Feb. high it could be off to the races.
Price is starting to get a bit extended, however; so caveat emptor. I booked some profits in SLV this week.
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The above is a short synopsis of the full market wrap report, which is available only on the Honest Money Gold & Silver Report website. This week's report is 35 pages long with more than 30 charts, including 12 stocks on our stock watch list that are top performing candidates.
We are so bullish on gold that we are offering a money back guarantee to all new subscribers. If gold does not make a new high during 2009 your original subscription will be refunded in full. Stop by and check it out. A free trial subscription is available.
Good luck. Good trading. Good health, and that's a wrap.
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