$1920 gold - The first real test for bulls?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Last week, I suggested a run to $1920 was likely from Thursday's low of $1875. Spot gold has since hit $1925 before turning back down. The question for traders now is whether the meat of the dip occurred last night, with spot prices briefly breaking below $1900 just before midnight EST. If so, it was quick and shallow, with a run to $1950 still likely to follow. For now, a close above $1920 for the week signals that this run still has short-term legs before a deeper pullback occurs. Although gold likely has higher to go before the spring – this current short-term run seems stretched, in my opinion. If $1920 holds up for the bears this week – a move to the $1865-80 level would not surprise me.
If this seems like I'm suggesting it's a craps shoot on which way it goes over the next week or two (1865 or 1950), it's because I think it is. However, both traders and long-term physical holders would do well to recall that "the trend is your friend," at least until evidence mounts that trend change is imminent.
Below is a 4-hour silver chart showing resistance at $24.50. Note that the upward-sloping trend line going back to November is broken. Bulls should be on the lookout for the $23.80 level to hold – below that, a move to the January 5 low is in sight, with consideration for a deeper pullback in play.
As early as mid-October, I suggested that should the top downsloping trendline of the S&P 500 be broken to the upside, consideration for a renewed bull market is merited. The below weekly chart shows the price consolidating above that trendline but below the 50-week MA. Bulls want stochastic RSI to stick into the overbought position while the price closes above 4100 on a weekly basis.
I'm not suggesting that a rip-roaring move is about to occur in stocks, but; I am asking if you're contrarian enough to consider the possibility that stocks (specifically the S&P) are building fuel for an imminent move back to new all-time highs.
Thanks and good luck!