This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs