Streettracks Gold Shares (NYSE: GLD) Reversal? Asks Market Timer Frank Kollar
November 13, 2007 (FinancialWire) (By Frank Kollar)
Shares of Streettracks Gold Shares (NYSE: GLD) have been rallying since mid-August and have not even come close to a correction.
A couple of weeks ago we wrote: “This spells trouble to us. The gold rally is very overbought and most traders are sitting on profits. All it will take is a match (negative news article, etc) to light a fire under them and we could see some heavy selling. That is not to say gold is not going higher long term, only that it is at precarious levels considering there has been no profit taking to mention for over two months.”
We noted in our weekend reports that while gold bullion and Streettracks Gold have moved higher every day for the past two weeks, the Gold & Silver Index (XAU.X) has declined on seven of those days. This divergence spelled, we believe, an imminent correction. With highflying gold, it could be a doozy.
On Monday, November 12, gold bullion lost $26.20 an ounce, or 3.15%. Streettracks Gold lost $3.43, or 4.6%. But the real news is the Gold and Silver Index, which tracks mostly gold mining stocks. It plummeted 14.59 or 7.9%. This does not bode well for a quick recovery in Streettracks Gold. Look for lower lows over coming weeks.
If you trade this ETF, be sure to keep a stop in place, as gold and gold stocks are the ultimate of volatile commodities.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy may have a position in Streettracks Gold.
Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.
Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.
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