A Market Timing Report based on the 9-27-2013 Close published Sunday September 29th, 2013

UPDATE on 10-07-2013: Go to the chart tab at the top of the page to see the most recent charts on GLD, TNX, and the SP500 Index.

UPDATE @9:55 a.m. on 9-30-2013: Gold and silver are down this morning as rates are down only a little, 0.15% to a 10 Year Treasury rate of 2.614%.  Perhaps the metals wanted a strong Treasury rally and did not get it (I make that point in regard to falling rates below.)  Regardless, my “strength test” noted in the first paragraph below still applies, and gold is NOT a buy here unless you plan on using a nearby stop.

The GLD gold ETF has formed a higher low and is outperforming the SP500 Index as mentioned on Twitter in a Vine Tweet last week (see Twitter feed to right and the curved yellow line in the chart).  But there is also a lower high that has been put in.  So what we have is an ETF caught between support and resistance.   That means that to be a clear buy, GLD has to rise above the prior market timing high on the daily chart of 132.78 – that would be a show of strength.  This will happen provided ONE THING happens, which I’ll show in the second chart below.

GLD bouncing from higher low after being turned back from yellow resistance line.

Again, note the yellow line which is the SP500 Index.  It has been falling about since gold bottomed.

The one thing GLD needs badly is for interest rates to continue moving down as they have recently.  Here’s the chart for the U.S. 10 Year Note:

Rates are falling still. Interest rates that is, because of Fed policy to continue QE at least until October.

Yet Fed Governor Bullard said they could lower the amount of monthly QE as early as October, so rates may NOT continue falling and may keep gold range-bound as a result.  If you buy gold, you must also follow interest rates.  If the Fed overdoes easing, gold will win.  If the Fed overdoes tightening of QE and then tightens the Fed interest rates directly (it is though that the latter is a long way off in time), gold will weaken.  That is what the market is watching most closely in regard to its bets on the metals.

Also check out the SP500 Index chart (separate post just before this one).

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