$$ Weekly Metals Report

Jan 11-15, 2010
For annotated charts of $GLD, $SLV and $GDX, please go here.

1. GLD

Price gained $4.06 on the week to close at $111.37, breaking out of the Keltner Channel (50,1,25) neutral zone but well short of the outer Keltner Channel (50,4,25) at $115.73. Trend line support sits at $108 and rising.

Momentum: The mid-December correction obeyed the 38-80+ RSI range rule for up trends. RSI closed Friday at 55.81, about 5 points shy of the bearish divergence resistance line from the late November momentum peak. If RSI can break through this bear divergence resistance, there is a decent chance for an acceleration of the up trend.

Volume: Strong short term accumulation last week with a background of long term accumulation is a sign of trend resumption.

Volatility: Std Deviation fell below its 125-day average last week and then hooked upward. ADX continues to fall from its late November peak, but has yet to cross under 20 and may not do so. No squeeze play, but plenty of volatility up side.

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

Next Week's Outlook: Having resumed its up trend, GLD has some room to run. Watch for resistance on the RSI at the bear divergence line, and on price at the 116-118 level.

2. SLV

Price: SLV gained $1.61 last week (9.7%) to close at $18.15. SLV broke out of the neutral zone, and sits halfway between the neutral zone and the outer Keltner Channel (50,4,25). Upside resistance is expected at the $18.90 - $19.10 level. If broken, the next resistance zone is $20.40-$20.75.

Momentum: The mid-December correction obeyed the 38-80+ RSI range rule for up trends. The bullish divergence between price and %B correctly forecasted an end to the late December correction.

RSI closed the week at 62.14, sneaking above old bearish divergence resistance from the September momentum peak. 62 is also the ceiling for downtrends, and stocks that consolidate often bounce between 38 and 62. Therefore, it will be important to watch if RSI continues to rise above 62, confirming the up trend and the bear divergence break out.

Volume: Exceedingly strong recent accumulation against the backdrop of long term accumulation confirms the bullish picture.

Volatility: We saw a squeeze play develop early last week as Std Deviation dropped to a multi-month low near its lower Bollinger Band (125, 1.5) with ADX ranging between 15 and 20 for the last 2 months.

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

Next Week's Outlook: SLV actually outperformed GLD last week. The up trend looks strong. Watch for new bear divergence between price and momentum at or near the outer Keltner Channel for short term profit-taking.


3. GDX

Price closed up $3.63 at $49.84 for a gain of 7.9% last week. Price has barely broken out of the neutral zone, and is about $4.50 shy of both the outer Keltner Channel (50,4,25) and the early December price peak. Trend line support is at ~$46.75.

Momentum: The mid-December correction obeyed the 38-80+ RSI range rule for up trends. RSI closed the week at 58.29, and needs to break 62 to confirm the uptrend. If RSI fails to break 62, GDX is at risk for correction and/or consolidation. Old bear divergence resistance hovers at ~65. If RSI can break through that resistance line, it's all systems go.

Volume: GDX finally had some short term accumulation last week after a month of significant distrubution.

Volatility: GDX developed a squeeze play last week with Std Deviation at a multi-month low near its bottom Bollinger Band (125,1.5) and ADX ranging between 15 and 20 for three months. There appears to be a lot of stored up volatility waiting to pop.

Last Week's 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.

Next Week's Outlook: GDX looks strong and could rise another several dollars in the coming weeks given the pent up volatility and the distance to the outer Keltner Band/prior price peak.