Wednesday, April 17, 2013

Market Analysis: Gold

First, please read Barry's gold bug column from yesterday.  It's a hoot -- and remarkably accurate.

Let's start with a look at the P&F chart.  These are great for getting a good look at the pure price movements.

First, notice the incredible rally gold experienced for the 2009, early 2011 period.  We see move in the gold ETF from 88 to 184.  In 2011 and 2012 we see a triple top at the 174 level.   The far right circle of "O"s shows that prices have been decreasing since December of last year.

What's particularly interesting about this chart is the triple top in 2011 and 2012.  I don't remember anybody talking about that.

The monthly chart has broken a trend that goes all the way back to mid-2005 -- before the "great recession."  That makes this trend break incredibly important from a technical standpoint.

On the weekly chart, notice that the 150-155 level has provided technical support for the last year.  Over the last two weeks, prices have broken this level in  a huge way -- printing very large candles on incredibly high volume.  Notice how the declining MACD telegraphed this move over the last year.

Finally, we see the daily chart which shows a literal crash of GLD.  Once the chart broke through the 150 level, it dropped like a stone.

Here's the bottom line: I have never seen the bottom fall out of a market like this before.  This is literally one of the sharpest, most severe sell-offs I've seen ever.