It’s been another fun filled week in the financial markets.
Some traders got Valentines, like Google and even Apple got a much needed break from the greased slide AAPL has been on lately.
But other traders got nothing but heartbreak…
The Yen got the crud kicked out of it, but that’s been going on for a while.
Stocks moved hesitantly higher and held ground somewhat uneasily toward the close today – unsurprising considering Bonds were up and Gold dropped like, well, heavy metal.
By the way, with Bonds and the Dollar moving higher and Gold falling, the S&P could be in for a long overdue sell off next week, but for now let’s focus on Gold because that market is in a world of hurt right now.
See the first chart here… Gold took out near term support and the bears went on a tear.
Gold’s been in a downward channel since October of last year, which has many Gold Bugs puzzled considering the persistent Bernanke easy breezy monetary policy.
In the short term, looks like Gold is likely to head down to test the bottom of the channel, and perhaps the lows from May last year.
Is it time for the Gold bulls to throw in the towel and dump their long term holdings? I don’t think so…
Let’s take a look at a weekly chart of the last few years to get a longer term perspective.
In the weekly chart you can see that Gold has been trading in a range since the skyrocketing bull move that stalled in late 2011.
I wouldn’t be surprised to see Gold head down to test the lows of this range which were last tested in May 2012. And, the bulls mounted a bit of a rally off those levels and after price had
coasted down in a very similar channel to what we’re seeing now.
A break above the channel down trend line should give the bulls a chance to test the 2012 highs near 1,800 but all eyes are going to be on the support levels below for now.
If the bears manage to push below last years’ lows then look out below because there is a lot of room to retrace this bull move that’s lasted for a decade.
Watch those May lows…
David K. Miller
Managing Editor, Absolute Wealth