Gold Update - 12/27/09

Last Tuesday GLD made a final move down to 105.31 which is a .764 retracement of the last leg up into the December high. That low completed a zigzag formation which may be wave A of wave 4 from the December high. Since wave 2 that bottomed in July was a zigzag, the rule of alternation says wave 4 will be something other then a zigzag. The current upmove should continue at least until the end of this week. It needs to get above the 12/16 high to confirm that wave A of wave 4 is complete.

Updated GLD Wave Count - 12/13/09

GLD/Gold

Below is a two year chart showing the updated wave count for GLD. This count starts with wave [0] at the October/2008 low. Wave [1] tops at the February/2009 high, Wave [2] bottoms at the April/2009 low and wave [3] is in progress. The current correction is wave A of (4) from the April/2009 low.

Wave A of (4) may complete by the middle or end of this week most likely in the 107-108 area. That range is a .618 retracement area and the location of the 50 day moving average. Even after this large correction GLD is still up over 28% since the April/2009 low and just slightly below the price just one month ago.
Stocks

Stocks are still looking bullish into Christmas week. The new short term price target off the 12/9 low is 10644 to 10683 on the Dow.

Update - 12/6/09

Gold/GLD

GLD had a large correction on Friday but was only down a little over one point for the week and closed above the low of the previous week. The wave count is not yet complete to the upside. This correction could continue a couple more weeks but the price low may have already been made.

Stocks

Last week was on upweek with some volatility the last two days. The Dow has been moving sideways to higher since mid November. It is not yet clear whether the correction ended with the 11/27 low but the eventual breakout will be to the upside. The 11/27 low will probably be the price low of the correction if it is not yet complete. The longer term price target of 11720 to 16602 on the Dow is still intact. The 10621 target given last week was the short term target price off the 11/27 low.


Note: I have added my Twitter feed to the blog. I plan to do shorter term updates via Twitter.

Update - 11/30/09

Stocks

Last week the Dow moved up into a double top on Monday and Wednesday that was lower than the previous weeks high. That was followed by a large move down on Friday that went below last weeks low in what looks like a C wave. That was the scenario given last week with the C wave down bottoming in early December. It now looks like the C wave has already bottomed. If so, the upside target will be at least 10621 on the Dow. The bullish longer term wave count shown in the last post still looks like the best count.

Gold/GLD

GLD topped last week in the 116-118 resistance zone, followed by a sharp selloff Friday. That low will probably hold with the next targets being 128 and 137.

Looking at New Bullish Wave Count for Stocks, Gold Update - 11/22/09

Stocks

After further analysis of the wave structure and other factors, I am backing off the more bearish outlook of the previous post even though stocks were weaker then anticipated last week. This week there may be a holiday rally and If the rally tops below last weeks highs, it could be B wave to be followed by a C wave down into early December. If that scenario plays out, early December may be a good time to add to positions.

The reason for the more bullish outlook is the wave structure, the wave count for gold and the seasonally strong period that lasts until early Spring. Gold is in a bullish wave three and still looks like it could go much higher. Since gold and stocks have been well correlated, that indicates stocks could also be in a wave three from the July low and in wave three of three from the November low. This count is shown below on the Dow. The running double three pattern in wave two is very bullish. The wave one of three possibility was first mentioned on 8/17 as an alternate count.

If that is the correct count, it gives rise to the following calculations for wave three. The length of wave three is usually 1.5 to 3.5 times the price movement of Wave one. That gives a price target for wave three in the 11720 to 16602 range. Wave three is usually 1 to 4 times wave one in time. That would give a time target for wave three sometime between 10/10/09 and 7/13/10. The wave count indicates quite a ways to go, so it may be toward the latter part of that range and probably not before February.

Chart: Six month chart of DJIA


Gold/GLD

Gold was strong again last week finishing near the highs of the week and above the 112.75 target. The wave structure is still very bullish. Next target range is 116 -118.

Stocks Forming Top?, Gold Met Target Price - 11/18 /09

Stocks

With the move higher this week above last weeks high, stocks now appear to be forming a topping formation with a wave five completion possible between this Friday and Tuesday of next week. The 1121.05 area mentioned previously looks like the best target price for the high on the S&P500. The Dow and S&P500 are both in the area of a 50% retracement of the move down into the 2009 crash low. Because of that, and the possible count of five waves up from the March/2009 low, the correction could be the largest correction since the March bottom.

Gold/GLD

GLD met the 112.75 target price today. It is possible to count five waves up from the late October low, but with stocks possibly not topping until next Tuesday, it may work its way higher along with stocks, possibly even as high as around 117.