And from Mugabe BTW tell again how things are for the man on the streets in Madrid. Is everyone still living in quiet desperation? UE still in the 20% area?
Good morning! Pls see below. Chart attached.
Looking at the chart:
Is GLD making higher highs and higher lows? Yes. Positive factor.
Is it above the 30 week simple moving average? Yes. Positive factor.
Is the 30 week simple moving average showing strength? No, it's flattening out. This is not an outright negative factor but it's saying caution is warranted.
Has GLD broken its trendline? Yes. This is not conclusive but would advise taking half the position off and waiting and seeing.
Looking at the indicators:
Weekly MACD and weekly RSI. Negative divergence since beginning of 2010. This is saying be careful, the best and strongest part of this rally has probably already happened (even though new highs have been made).
Conclusion:
Anyone holding GLD a as trading position would be advised to lighten up, say selling half their position and waiting and seeing. This is not a time to buy GLD, neither is it a time to short GLD. Both actions would be premature and amount to second-guessing the chart.
More from Mugabe
Whither the SPY?
It seems clear to me that the SPY is in a confirmed downtrend: lower highs, lower lows, below the flat 150 day sma, etc. The question is whether the previous rally from the March lows was the beginning of a new bull market and we will therefore not revisit the lows, or whether it was merely a rally in a secular bear market (and the lows will consequently be revisited and breached).
I don't know the answer to this question and neither does anyone else. However, I think the following is worth bearing in mind ...
The Fib retracements of 50% and 62% frame a very significant support area which corresponds to the first big pullback in the rally from the lows. I think that we could easily get down to this area (between 87 and 95) as there is not much significant support until then. In addition, the head and shoulders top targets a pullback to 90, slap bang in the middle of this area. There will then probably be a pitched battle waged to see which way the market goes.
I have no idea how this battle will be resolved, and have no preconceived bias. The only thing to say at this stage is that the very drawn-out nature of the top -about 8 months in the making- would suggest that the final fall will not end in the 87-95 range. However, we'll cross that bridge if, and I think when, we come to the range.
