Thursday, March 1, 2012

GLD, GLD/SPY Technical Update, Gold Was Dumped After Bernanke's Testimony

GLD, the SPDR Gold ETF, lost 5.31% yesterday after Fed Chairman Ben Bernanke didn't mention QE3 in his testimony to Congress (Zacks Research, Investor's Business Daily). And GLD didn't seem to care that the European Central Bank loaned 530 billion euros to 800 banks in the next LTRO (long-term refinancing operation) to protect the funding markets from a sovereign debt bomb in Europe (EuroMoney, Reuters, Zero Hedge). Check out which banks participated in the LTRO. Was the GLD move based on stability over liquidity (monetary inflation)? Decent economic data was reported as well (Reuters, Business Insider). Today the S&P closed red, but Treasury yields rose. Correlations are starting to get interesting again. Overnight, or last night, gold spot (XAU/USD) bounced off yesterday's lows.

GLD, GLD/SPY Technical Update

Now for some charts. The first chart (at the top) is an intraday 1-minute chart of GLD showing the crash. There were huge chunks of red volume spikes.

The second chart is of the daily. As you can see, the $175 ceiling is a key resistance level to break. I think a breakout would prove that GLD has enough strength to rally to the September 2011 high of $185. It failed to break above $175 twice. Above $185 is the next freedom level.  GLD is currently testing the 50 and 200 day moving averages (red/blue lines), so those need to hold for the bull case to stay intact in the short-term. The last time GLD's 50 and 200 day moving averages crossed was in mid-2008, a few months after and during a deep correction.

The third chart shows two long-term uptrend lines that are either broken or still in play. In that chart I'd rather watch the 50 week moving average support level. If GLD falls through both trend lines and the 50wma, the 200 week moving average and uptrend line from 2005 are the next potential support candidates.

Lastly, check out the GLD/SPY ratio. It looks like it just broke through a major uptrend line. If confirmed, the ratio could roll down to the 200wma or floor support levels. Factor time into the trend lines and MA's.

Overall, to be bullish on GLD, I'd like to see a breakout above $175. I understand the long-term bull case for gold. In the meantime, if GLD breaks through levels mentioned above, it could be vulnerable to a correction or swings in a wide sideways channel. The move from the exhaustive top in September to now kind of reminds me of the chart in late 2009/early 2010. In that case GLD eventually broke above $115 (or 1150 on XAU/USD) resistance on the third try.







Charts are courtesy of StockCharts.com

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