Honest Money Gold and Silver Report: Market Wrap

By: Douglas V. Gnazzo | Sun, Apr 12, 2009
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Market Wrap

Week Ending 4/9/09

The following is an excerpt from the full market wrap report available at the Honest Money Gold & Silver Report website. Stop by and check it out. For a free trial subscription submit a request via the email address on site.


Gold closed down -1.62% at $878.80 (continuous contract). During the week it hit an intraday low of 865.00. So far, the important $850.00 price level has held. From last week's report:

$850 is a key support level, as it is the high of the last bull market, and it marks a significant inflection point for the present bull market. It is important for price to remain above this level.

MACD has made a negative crossover, which suggests more downside action to come. It appears that $850 is going to be tested.

The weekly chart below shows a possible inverse head & shoulders formation in the making.


Silver was down -3.29% for the week, closing at $12.34. Silver has broken its bottom trend line and appears to be setting up to make a negative STO cross over. In last week's report I said:

I have been bullish on silver and remain so, especially long term, however, I'm not thrilled about the recent action. What started out as a short term correction may be morphing into an intermediate term move.

Not only did silver break its lower trend line, but as the next charts shows, it looks like the STO indicator is rolling over and setting up for a negative cross. If this occurs it would suggest that lower prices lie ahead.

Gold Stocks

The GDX gold stock index was down -1.46% for the week, closing at 33.04. In last week's report I stated:

The chart below is the same chart used last week, but it has been updated for this week. The RSI negative divergence played out to the downside filling the open gap. The CCI indicator was spot on flashing an early warning.

The charts of most precious metal indices are leaning to the downside, as are most of the precious metal stocks themselves. Most are overbought and need to consolidate. There are negative divergences.

As of now I'm looking for more downside action to consolidate the recent strong advances and resulting overbought conditions. This is normal and healthy market action.

Well, more downside action came this past week. Price is testing its lower trend line. Most of the indicators are bearish and suggest further downside action.

However, there are three potential indicators that may be signaling positive developments are not too far down the road.

A gold cross has been made where the 50 ma turns up and crosses above the 200 ma. This is a bullish long term signal that does not often occur. When it does, attention should be paid.

Money flows are still very strong. This is positive. If they hold near these levels it will be very constructive, as it would indicate money is not flowing out.

Notice the level where the STO indicator is at: near the 20 oversold region. As we saw earlier in this report, this price level often presages a reversal back up (rally).

On the second chart you can see where and what happened on similar previous occasions. There are several individual gold and silver stocks that are building the same formation/indicators. I am watching them for possible buying opportunities.

Right now almost everyone is bullish on the stock market and bearish on gold. That piques my contrarian interest.

Good luck. Good trading. Good health, and that's a wrap.

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Douglas V. Gnazzo

Author: Douglas V. Gnazzo

Douglas V. Gnazzo
Honest Money Gold & Silver Report

Douglas V. Gnazzo is the retired CEO of New England Renovation LLC, a historical restoration contractor that specialized in the restoration of older buildings and vintage historic landmarks. Mr. Gnazzo writes for numerous websites, and his work appears both here and abroad. Just recently, he was honored by being chosen as a Foundation Scholar for the Foundation of Monetary Education (FAME).

Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly, Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.

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