Make Money with Technical Analysis

Welcome to Technical Analysis charting for stocks and indexes. This site provides technical analysis for beginners and advanced investors alike. Technical analysis can help you make money by analyzing the charts of stocks you own or wish to trade. Technical analysis is a great investing tool to learn and use and can help you make money and keep your current investments profitable and secure. If you have any questions please feel free to email me.

Gold Still Selling Off

GLD is an index that tracks the movement of gold. Gold has been selling off since the beginning of the year and it looks to continue that trend. At the beginning of the year gold was trading at record highs, as was GLD at 117.5 range. Since then it has pulled back to the 109 mark. GLD looks to be in a definite down trend/correction and looks as though it has more room to go. With the recent rate hike, making the dollar more attractive to foreign investors, expect money to continue to flow out of gold. I believe money can be made buy purchasing puts against the GLD or shorting the index. In the next month or two one could expect a mean reversion back to the 200 day moving average, which would be around the 100 mark. There's significant room for a gain from a short position.

Dow Due For Another Pullback

According to the nine month chart, I believe the Dow is due for a mild correction. The reasons behind this hypothesis are as follows. For starters, the news of the Fed raising the spread between the discount rate and the federal funds rate could trigger selling in the broad market. This is because money has just become more expensive to borrow for troubled firms. This, along with the fact that the Fed has sworn off its quantitative easing program, will lead traders to believe that firms are now on their own financially. Secondly, the chart is in a relatively overbought state. The technicals just don't support a further rally.

An in depth look at the technicals shows that the recent rally, started in early February, may be losing steam. The volume has been sluggish while the chart has been moving upward. A trend is less convincing when volume is not rising with the stock/index.  Volume has actually decreased consistently while the index has been rising. 

Next, some of the oscillators are in overbought territory with the index nowhere near to making a new peak, which would happen above the 107 mark. For an uptrend to continue a pattern of higher highs and higher lows needs to be present. It is also coming up on resistance at a long term trend line. The trend line also happens to be at a fibonacci retracement of 61.8% of the previous trend. This should reinforce the resistance area at 104.29

All that being said, one could expect a pullback to the 102.40 level within the next week.