BullBear Trading: Stock and Financial Market Technical Analysis


Yesterday we had a breakout above the symmetrical triangle in GLD. Today GLD gained even more, pushing up to what may be a head and shoulders neckline. Should it rise above 98.00, we may be seeing a buy signal of major proportions.

Let me step back a moment and say that in an earlier blog, I had mentioned the probability was good for a decline, or a false break, before the rally, "First the Pain, then the Gain." The market likes prove the majority of investors wrong and this time I was fooled. It isn't the last time this will happen. Knowing where to change my view of GLD is a real help in this case.

So now I want to caution investors. There are likely to be a few false moves here, as well. Knowing where to put a stop loss is still a good idea until we have an actual neckline breakout. After the breakout, there will still be plenty of profit potential, since GLD has a minimum target of 129-130.00, once the neckline is breached.

For you Elliott Wave afficionados, this move is a potential wave 3 or C. It appears that this wave may be extended. In other words, a potential "melt-up"may be ahead of us. The reason? A look at the Shanghai index shows a monthly decline of 24% at Tuesday"s low. It appears that much of the buying is coming from Asia, beginning with the Bank of China.

Good luck and good trading!

Tony

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Comment by Steven Vincent on September 3, 2009 at 6:23pm
Thanks Tony. You may be right and the big breakout is at hand. I hope so! I do worry that the breakout is too well anticipated and that there may be too much fast money at work and not enough buyers left to take us over the top and beyond. Maybe my concerns are unfounded. We soon shall see!!

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