$$ Weekly Metals Report

Jan 4-8, 2010
For annotated charts of $GLD, $SLV and $GDX, please go here.

1. GLD

Price has retreated into the Keltner (50,1,25) neutral zone from the peak in early December. The neutral zone can be an excellent entry opportunity depending on the momentum and volume pictures.

Momentum: The recent correction obeyed the 38-80+ RSI range rule for uptrends. The 45-day RSI moving average remains well above 50 which is bullish. The early December peak provided bearish divergence which portended the recent correction. If the correction does not kill the uptrend, the bear divergence can make the uptrend stronger. Finally, the correction has provided an intermediate term positive reversal in the RSI, where momentum made a lower low vs. late October, but price could not make a lower low. As a result, we draw a new trend line on price connecting these important lows.

Volume: There has been recent short term distribution in a picture of long term accumulation. The 21-day average is well above the 55-day average. The 55-day average is sloping up nicely. And the 3-day moving average has fallen below the 21-day average. This type of set up usually provides an excellent mid-trend entry point, especially when combined with a positive reversal in the RSI.

Outlook: Positive. I would not be surprised to see GLD resume its uptrend soon. Should the trend line on price fail, all bets are off.

2. SLV

Price has slipped below the neutral zone, just barely.

Momentum: The recent correction obeyed the 38-80+ RSI range rule for uptrends. The 45-day RSI moving average is hovering at 50.24 which is essentially neutral. The RSI shows bearish divergence which portended the recent correction. If the correction does not kill the uptrend, the bear divergence can make the uptrend stronger. The correction has not provided a positive reversal in the RSI. There is, however, some bullish divergence between price and %B which could forecast an end to the recent correction.

Volume: There has been recent short term distribution in a picture of long term accumulation.

Outlook: SLV does not look as strong as GLD right now. If GLD resumes its uptrend, however, SLV should follow.

3. GDX

Price remains in the neutral zone.

Momentum: The recent correction obeyed the 38-80+ RSI range rule for uptrends. The 45-day RSI moving average is hovering at 50.30 which is essentially neutral. The RSI shows bearish divergence which portended the recent correction. If the correction does not kill the uptrend, the bear divergence can make the uptrend stronger. The correction has not provided a positive reversal in the RSI.

Volume: There has been significant short term distribution in a picture of long term accumulation.

Outlook: GDX does not look as strong as GLD right now. If GLD resumes its uptrend, however, GDX should follow unless the general market tanks.