This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Gold, Oil in Sync to Rally Now and Sink Later

NEW YORK ( TheStreet) -- In my writings about gold I began to warn about a potential "Death Cross" back in April. On April 16, the 50-day simple moving average moved below the 200-day simple moving average, confirming that feared negative technical signal. This ended the bull market for gold that began with a "Golden Cross" on Feb. 11, 2009. The 50-day had been above the 200-day since that date.

My near-term forecast for gold called for weakness to my annual pivot at $1,575.8. In May, I had a monthly value level right at $1,525.8 the Troy ounce. I did not expect gold to fall as hard or fast as it did in May, so when my annual pivot at $1,575.8 failed to hold on May 14, I decided to take a look at the monthly chart. From this analysis I noted that the base of the busted "Gold Bubble" was the $1,535 to $1,525 price range.

On May 16 I wrote, " It's Time to Buy Gold for a Trade" at the $1,535 to $1,525 trading range. Today, I will give you an update on the risk / reward for gold for the remainder of the year.

Chart Courtesy of Thomson/Reuters

The Daily Chart for Comex Gold Futures: The $1,535 to $1,525 "buy zone" was tested three times in the second half of May, on the 16th, 23rd, and 30th. The first upside target was my annual pivot at $1,575.80, which had an 85% chance of being tested again on a rebound. With gold now well above $1,575.80 the next target was my zone of semiannual pivots at $1,635.80 and $1,659.40, with that range being tested Wednesday morning.

Gold is between the 50-day and 200-day simple moving averages at $1,621.70 and $1,685.20. With the monthly chart for gold negative, gold is more likely to trade down to my annual value level at $1,388.40 in the second half of 2012, not back toward the bubble high at $1,923.7 set in September 2011.

In my writings about crude oil I have noted the negative divergences on the weekly chart at the end of March with oil just above $103 per barrel. From the beginning of the year I talked about my annual and semiannual pivots at $103.58 and $104.84 saying that strength above that range would be difficult to sustain.

Fundamentally crude oil has been trading in a tug of war between Wall Street speculation to the upside and weaker-than-expected economic growth to the downside. The economic data has been winning the war since the end of March, but key levels held on Monday.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 1.64%
FB $117.43 -0.96%
GOOG $692.36 -0.84%
TSLA $232.32 -3.92%
YHOO $36.01 -1.42%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs