Chart update May 17

GLD is either consolidating or setting up for reversal in the short term.  Friday painted quite a candle, a hammer with a large body.  IMO, this is a confusing candle and not as indicative of strong relief buying as a hammer with a small body.  Stochastics are starting to hook for a cross of the 80 signal line.  I have annotated prior crossings in magenta and marked prices finding the 20 day MA with arrows.  Notice 100% of the time this indication occurred, price found this moving average.  Therefore, I think the odds favor a pull back to at least the 20 day MA, currently 115.71 and marching higher.  RSI is still indicting an over-bought condition. A gap exists around 115.50 and it will almost certainly fill.  The 50 day MA has a steep trajectory and will be arriving in the 115 area soon enough to provide support for any correction.  Major chart support exists at 113.50, the breakout price level.  Gradual progress followed by consolidating pullbacks are healthy IMO and offer entry points.  I hope to see this occur rather than the breakaway train.

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SLV is in a similar boat as GLD.  I think odds favor a pullback.  Silver is the play thing for JP Morgan and world's most manipulated market.  JPM holds the massive short position it inherited from Bear Stearns when they took them over.  JPM routinely engineers waterfall events to allow them to cover a dramatically lower prices.  The magenta boxes show such events, one successful and the last which largely failed.  The fact that the last one failed is wildly bullish in that this rarely, if ever, happens.  The CFTC is at least acting serious about limiting metal positions and a investigating price fixing.  We may be seeing the beginnings of the unwind of the silver short that has sat on the market for years.  If so, throw charting out the window because the charts reflect a manipulated silver price.  The real silver price will redefine technical analysis for silver and meaningful information will only be apparent when price stabilizes.

A stochastic cross puts 18.50 back in play, where the 20 day MA will be waiting.  Also, major price support exists at that level where we had breakout.


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GDX is pulling back as I thought it might.  The gaps are waiting to be filled.  The nearest one is likely going to fill on this correction, the one at 45 may be another matter altogether.  I sold covered calls with the 51 strike to protect myself into the gap.  I will be inclined to uncover there if we see support.  This price corresponds to the breakout price and should provide formidable support.  The 20 day MA is moving into this area and is the initial price target after the stochastic cross of the 80 signal line.  A correction that completely fills the gap takes us to 50 and places us square in the middle of the uptrend channel.  In one word, healthy.  


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SLW painted an awesome hammer candle that GLD did not.  Notice the small body and long handle.  The bullish sentiment in this stock is overpowering any major selling events.  The trajectory of the 20 day MA will put it into the gap in short order and stochastic is setting up a bearish cross of the 80 line.  I like a buy in the gap.  Major support is at 17.50 corresponding to a 50% Fibonacci retracement, 50 day MA support, and breakout price level. 


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