Friday’s ETF Chart To Watch: SPDR Gold Trust (GLD)

by on August 24, 2012 | ETFs Mentioned:

The bulls pumped their breaks for the second day in a row as economic uncertainties from around the globe weighed on investors’ confidence. On the homefront, weekly jobless claims came in worse than expected, sparking a round of profit-taking on Wall Street despite encouraging new home sales data. Overseas, the bears were quick to emerge as China reported a slowdown in manufacturing activity while looming worries over the health of the debt-burdened eurozone prompted talks of a recession [see also 17 ETFs For Day Traders].

Investors will keep their eyes homeward tomorrow as much anticipated durable goods orders data hits the street at the opening bell. As such, our ETF to watch for the day is the State Street SPDR Gold Trust (GLD, A), which may experience volatile trading especially if the latest data release encourages investors to jump ship to the safe havens. Analysts are expecting for July durable goods orders to have increased by 3%, marking a modest improvement from the previous reading of 1.3% [see also GLD-Free Gold Bug ETFdb Portfolio].

Chart Analysis

GLD has been flying under the radar for most investors over the past quarter as the precious yellow metal has been quietly inching higher while evading the headlines. Notice how since bottoming out at around $150 a share in mid-late May 2012, GLD has been steadily climbing higher along a rising support level (blue line). What’s encouraging this time around is that GLD has actually broken above its 200-day moving average (yellow line); this is significant because GLD had previously tried, and failed, to summit the $158 level back on June 6, July 3, July 27 and most recently on August 10, 2012 [see also How To Trade Gold Futures].

Click To Enlarge

Recent price action in GLD has been undeniably bullish, although conservative investors may wish to hold off from jumping in long until shares establish definitive support above the 200-day moving average for five or more consecutive trading sessions depending on individual risk preferences [see ETF Technical Trading FAQ].

Outlook

The latest durable goods data may inspire a gold rally if the report misses the mark; in terms of upside, GLD may encounter resistance as it nears the $165 level. On the other hand, better-than-expected results should bring back the bulls to Wall Street, which could create headwinds for safe havens; in terms of downside, this ETF has support at $158 a share followed by the $154 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

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Disclosure: No positions at time of writing.