Gold & Gold Equities Pop and Oil Has a Drop
Source: Resource Stock Digest, Chris Vermeulen††(2/11/09)
"Gold and gold equities have performed well over the past two months climbing in value as the broad market drifts sideways. . ."
In terms of the Gold Bullion Trading Fund Ė GLD, I expect to see some type of pullback towards our support trend line as profit takers step. I like to buy during pullbacks but unfortunately we had the news with the recover/bailout plan and that scared investors and they dumped a bunch of money back into gold the past two days giving gold a nice move higher. This heightened fear level could push gold higher for a couple days, but a retrace will eventually have to happen. I also want to point out the huge volume today. The last time we saw this type of volume was when gold made a huge move higher and almost marked the high for the previous rally in Sept.
Both gold and gold equities are on a buy signals, if you are long or decide to buy here remember to place stop orders to protect yourself in case things rollover. It's better to break even or have a small loss than it is to hold BIG losing position for a long time. You can always buy it back if things look bullish even if it happens to be the next day.
The broad market is starting to look like its bottoming as buyers stepped back in today as we reached the bottoms for the SP500 and Dow. We won't see a big rally until oil bottoms and turns up lifting energy stocks, and we need the financial stocks to start moving higher as well. Once they start moving up, then I expect we will see some exciting gains in stocks as investor will have confidence again. Looking at oil, I expect we will see lower prices over the next week or so as it hopefully flushes out the last of the sellers.