GLD Watch

Gold always fascinates, and these days you don't have to be Goldfinger, with a warehouse full of the stuff, to play. The exchange-traded fund GLD will do nicely.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
GLD $118.98

At 11:06 a.m. Eastern

Jim Cramer this week released a buy list with GLD on it. I like Cramer's style, but not always his recommendations. Part of it is a difference in time frames: He looks at the longer term, and I counter that in the long terms, we're all dead (or at least ensconced in an assisted living facility).

The technical tools I use are in the main bullish on GLD, but not with a lot of conviction.

One problem is the strength of the trend. It's an uptrend (using the 14-day exponential moving average as measurement), but the average directional index (adx) is low, a mere 23 and pointing downward, meaning the trend is weakening even as GLD rises, as it has for the past five trading days.

On the bull side,

• Person's Proprietary Signal moved into bull phase on Wednesday.
• The macd is moving up through bear territory toward the zero line, and when it crosses above, it'll be a bull signal.
• The stochastic is rising through the neutral zone.
  
• The price has moved above the 20-day simple moving average.
  

On the bear side,

• The parabolic sar remains in bear territory. Last time it did a phase switch it fillowed the pps by a day, but not this time.
• Volume is declining. Now, that might be just a result of the looming 3-day weekend holiday, but if traders were serious about bidding up gold, then the volume would reflect that.
  

The biggest issues with gold are these: GLD has already had a tremendous run up over the past year and a half: From below $70 up to the most recent high of $122. The train left the station a long time ago, and as a trader I generally like to get on board early, so I can grab a good window seat. It is trading below the swing high, and that high will serve as a level of resistance, because of money that was left on the table when gold began to slide on May 14. A lot of money may be poised to get out with a small profit at around that level. The most recent swing high, in December, also has a similar effect. Reversal Levels

• $122.24, +2.7% (May 12, 2010 swing high)
• $119.54, +0.5% (Dec. 3, 2009 swing high)
• $118.98 <== You are here.


• $114.51, +3.8%


• $113.31, +4.8%

Note especially how little distance there is between the present trading level the upside reversal points, compared to the greater size of the downside steps. Jim Cramer may be right for the long-term, but I'd like to see a breakout above $122.24 before I'll break out the champagne on GLD.

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Abbreviations:

• psar - Parabolic Stop and Reverse
• adx - Average Directional Index
• pps - Person's Proprietary Signal
• ma20 - 20-day moving average
• macd - Moving Average Convergence-Divergence
• sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.

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