The action in gold is looking a lot like the classic short setups that William O'Neil described in his book. Gold is retracing to its 50-day moving average and resitance from its January highs while forming a bear flag. This is unfolding faster than O'Neil's ideal setup but things seem to happen much faster these days with all the "hot money" in the markets. I'll be watching GLD for a breakdown.
The bulls stepped up nicely today and pushed the market higher on increasing volume. The indices are still beneath resistance but now that they're approaching oversold territory I think they have more potential energy for a breakout attempt. Of course earnings reports will be flooding out soon so I wouldn't put too much weight on the day-to-day technicals. Here are the index charts:
All three indices bounced back above their 10-day moving averages so all the short-term trends are "up" again.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Primary | Down | Down | Down |
| Intermediate | Up | Up | Up |
| Short-term | Up(+) | Up(+) | Up(+) |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
Excellent point about earnings overtaking technicals in importance right now. I believe your point was proven with today's action. The volume increase Thursday was meaningless thanks to GE's poor earnings.
It seems DBA is posting a similar bear flag warning? Very surprising...