Market Wrap

Week Ending 07/23/10

Gold

Gold was down slightly for the week (-3.70), closing at $1189.30. Gold has broken below its rising trend line from Feb. - April and looks set to test horizontal support from its July low at 1175, which connects back to the May low and April - May breakout level.

Since reaching its all-time high in June, gold has been in a short term downtrend, as defined by its declining price channel.

RSI has turned up and MACD is slowly curling up, as if getting ready to make a positive crossover. Gold appears to be trying to carve out an important bottom. It looks as though it still has some work to do.

Next up is a daily chart of gold with a set of Fibonacci retracement levels extending up from the Feb. low to the June highs.

If the recent low at 1175 does not hold, the next target would be around the 1155 area, as marked by the 50% Fib level.

The weekly chart shows RSI and MACD heading down. MACD has made a negative crossover and suggests there is some more downside action coming before it turns back up.

First support is offered by gold's diagonal trend line. Note the red horizontal line marking the Feb. low near 1055.

This level would have to be broken below to call gold's long term trend into question.

Gold Stocks

The precious metal stocks, as represented by the GDX index, had a good week, moving up 1.38% to 49.21. However, the GDX recently made a double top, and has been in a short term correction since, as depicted by its falling price channel on the chart below.

STO "appears" to be putting in a double bottom, which needs to be confirmed by MACD making a positive crossover. The histograms are receding back towards zero and MACD is starting to curl up, suggesting that a positive crossover could be coming soon.

The weekly chart shows MACD making a negative crossover, which suggests further downside action.

So, the weekly and daily charts are at odds with one another. It remains to be seen how it plays out.

If diagonal trend line support is broken below, the next target would be around 45, marked by the blue horizontal support line;and further below at the 38% Fib retracement level near 41, highlighted in yellow.

Good Luck. Good Trading. Good Health. And that's a Wrap.

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