I'm Still Waiting

The Dow and the SP500 closed at another new low. The DJT continue to make new low and signaling lower low for the DJI. The SP500 closed below the April 11, 1997 low of 737.65 and the DJI is still more than 600 points away from its April 11, 1997 low of 6391.69. Strangely enough, the Nasdaq 100 and the Russell 2000 are still holding above their Nov. 20, 2008 low, but they are drifting toward that mark. With the market going down to a level made more than 10 years ago, one would think gold will be more than $1000 an ounce. Instead, gold has been consolidating from its recent high. It has pulled back below the $1000 mark and has been bouncing around the 970-930 level. Even some of the mining stocks have pulled back from its recent high and testing major support level. What do all these mean?

With the VIX below 50, there is just not enough fear in the market for gold to play its safe haven role. I believe when the DJI break below the 7000 level with increasing uncertainties in the financial system, fears will return and gold will resume its rise to $1000 an ounce and beyond.

The chart on the future contract for gold shows the price for an ounce of gold has pulled back to the 925 support level. If it break this level, then the next key support will be the 50 SMA around the 900 level. These are the key levels to monitor for the future direction in gold.



Similar for the gold ETF, GLD.



In order for gold to continue its rise, it must hold these support levels. For the gold mining stocks, the picture is mixed. When gold went above its July 2008 high, the mining stocks was unable to get close to their July 2008 level. The mining stocks EFT, GDX shows it has pulled back to the trendline and the 50 SMA after reaching its September 2008 level. Furthermore, it has formed an ascending triangle pattern with a possible breakout level of 37.50 on the upside and 32.50 on the downside.



ABX has the most unsettling pullback. It has closed below its January 2009 low with the 50 SMA turning down once again. If this stock break below 30, then GDX will likely to break below the 32.50.



The GG and NEM show a similar price pattern as the GDX.





While the market is trying to find the bottom and gold is getting ready for the next move up, I'm still waiting for them to set up for my next trade to go long on DXD and GLD.