GLD, the SPDR Gold Shares Trust ETF (GLD) continues to perform well despite the ill will emanating from doubters, disbelievers and deniers worldwide. Following in the wake of last weeks breakout, GLD is working diligently to establish a new support level. It is succeeding and artfully so.
The first and obvious observation is the last four trading days including today.
Very clearly on the 10-day chart, GLD has crossed a threshold and support is developing at about $161.00. The trading range for these four days is incredibly tight. Prices have ranged between $162.45 and $161.23. The range has narrowed since August 23 (when it was $162.45 - $161.23) strengthening the level. With the exception of August 27, when GLD closed near the low of the day, the other closes and the price today as I write are very close: $161.89, $161.97 and $161.66. Today's close is critical but for now the day is shaping up just fine.
The six month chart above gives me supporting evidence for the uptrend. Slicing through the noise of the last four months, the red line cuts off all the trading activity from May through last week and brings the share price back in line with the intermediate term trend. It also lines up nicely with the consolidation which occurred before the price plummeted below $150 in May.
The 18-month chart provides confirming evidence as well but also an alternate possibility, although one which further confirms an upward bias. The green line is the same as on the previous chart, just extending further back. It agrees with the analysis on the six-month chart.
The variable is the supporting red line. The 18-month chart allows for greater downside in contrast to the red line on the six month chart, that line here colored blue.
If GLD fails to hold $161 then the next drop would be back to $154 - $155. At that point I see concrete support and still an upward bias in what I consider to be an ongoing bull market.
Fundamentals being what they are (unchanged) and circumstances not quite getting better (consumer confidence the lowest in 9 months) in the U.S., GLD should continue moving higher. Outside the U.S. troubles persist and as global growth also continues to slow then GLD (and gold worldwide) should see much higher levels.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.