Wang’s Happy Trading

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Gold prices broke out today and traded above $940/ounce.  This is a new 6-month high!  In my article last week, on 2/4/09, I said,

“We’ll wait for GLD to confirm that $88 will hold. Above $90, we should see more buyers coming in. March in-the-money calls are reasonably priced. AEM is another good vehicle to play gold. Although it is very volatile, it is a momentum stock and can run up fast!”

GLD successfully tested $88 and closed above $90 yesterday.  Today, it jumped on high volume, more than twice the average volume!!  GLD closed at $92.29, up +2.31%.  AEM also did well, gaining +6.58%, or $3.48, finally breaking above $55.

GLD

GLD added $2.08 to close at $92.29.  It jumped on very high volume today.  It closed just below the resistance at $92.5.  This is only a soft resistance.  The nearest hard resistance is between $95-$97.5. 

Comparing to the stock market, which had been treading water in a tight range since November last year, GLD had done much better.  We can see a big divergence in this comparson chart:

SPX has basically traded flat.  On the other hand, GLD has risen nearly +30%, from $72 to $92!

GLD’s chart is still very strong.  Its daily MAs are curving higher and still holding a bullish formation.  The MACD is also turning up.  I think GLD can easily revisit $100 within the next few months, which means gold can retest $1,000, and likely go above.  Again, March “within-the-money” calls are reasonably priced.  If GLD go to $100 within the next few weeks, these options will probably double.

Good night and HappyTrading! ™