Thursday, October 07, 2010

Gold And Silver Update

As I mentioned the other day, my upside targets for gold and silver have been reached so it's not a surprise for me to see today's big down move. If you look at the above chart of SLV which is the silver ETF, you will notice a bearish engulfment pattern taking place. Gold (GLD) also has a similar pattern.  The fact that this bearish engulfment is taking place following a very overextended rally leads me to believe that a pullback is about to unfold. Notice the heavy volume today which may be a sign of a climax.
I am not bearish on the metals but I do feel that existing longs should look to raise their trailing stops to lock in any gains that they may have. On Friday if we see a move below today's low, that would confirm (at least to me) that some kind of correction is about to take place.


brd said...

Nice inside days friday for gld & slv. Thoughts?

Kevin said...

Yea, I see the inside days. The metals look a little toppy here but I'm not going to short them. The key is to watch the low of the bearish engulfment day. If that low is taken out, we may see a sell off.


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