Some Technical Damage With Tech Leaders – GLD Rising On Low Volume

by Olivier on October 6, 2010

So much for my assumption the precious metals to look extended. Gold and silver simply continued to move higher. The precious metals didn’t pull back or consolidate as I would have expected. A few things that come to mind:

  • Technically speaking all time highs offer ‘blue sky potential’ as there is no overhead resistance.
  • Whenever a stock acts stronger than expected it is usually a bullish signal.
  • No matter what a chart looks like, stay emotionally detached and look for sound entries where you can control risk.

So are we witnessing a melt-up in price? Maybe. Only time will tell.

In addition to sky high bullish sentiment readings another sign to at least reign in one’s emotions and to be cautious is GLD – SPDR Gold Trust Shares displaying a lack of volume on this move up. This could be a warning sign.

GLD NYSE SPDR GOLD TRUST SHARES ETF Technical Analysis Stock Price Chart

Up-to-date GLD – Gold ETF chart on my public list.

Talking about warning signs, I see traders starting to be cautious and raising their cash levels. Some are cashing out and that includes the precious metals complex. Today we witnessed technical damage with lots of tech stock leaders. They mainly belong to the ‘cloud computing’ investment theme. This could be interpreted as the first signs of a trend change. We are not there yet. Overall the market still looks like it is headed higher.

Tonight I’m adding two new stocks to my public list:

  • TMB.TO – Tembec
  • AUMN – Golden Minerals

Concentrate on the process of trading. Stay disciplined. Don’t chase stocks.

Don’t worry about the trades that you miss, there will always be another. – Tyler Bollhorn

My public list with all my charts can be viewed here:

Buenas noches!

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