GOLD IS BACKING OFF FROM 1,000 AS GOLD STOCKS FALL BELOW 200-DAY AVERAGE -- GOLD GIVES FIRST SHORT-TERM SELL SIGNAL IN MORE THAN A MONTH

GOLD STOCKS BACK BELOW 200-DAY AVERAGE... Gold stocks are coming under new selling pressure. Chart 1 shows the Market Vectors Gold Miners ETF (GDX) trading back below its 200-day moving average today. Part of that selling is coming from the two biggest gold stocks. Chart 2 shows Barrick Gold tumbling 8% today and falling back its 200-day line. Chart 3 shows Newmont Mining retesting that line. The inability of gold stocks to maintain their recent upside breakout is a short-term warning sign for them and also for gold itself which is meeting some resistance at the $1,000 level.

Chart 1

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OVERBOUGHT GLD BACKS OFF FROM $1000... As you know, I had been expecting a retest of last spring's high at $1,000 in bullion. We touched that level last week. And, not surprisingly, gold is meeting some profit-taking at that obvious resistance barrier. The Commodity Channel Index (CCI) line on top of Chart 4 also shows the streetTracks Gold Trust (GLD) to be in overbought territory. One of our readers asked me to show the Parabolic Stop & Reversal (SAR) dots on the GLD as I've done in Chart 5. The SAR dots are used as short-term support levels in a rising trend. When the dots are below the price, the trend is up. When a lower dot is hit, a short-term sell signal is given. Chart 5 shows that the GLD gave its last short-term buy signal in mid-January near 85 (green circle). Today's price drop hit the lower dot (which is a stopout point) and has given the first short-term sell signal in more than a month (red circle). Chart 6 shows a point & figure chart of GLD. Prices have experienced a downside reversal (red boxes). Potential chart support is visible in the 92-90 region. Although the major trend of gold is still up, those with a short-term trading horizon might want to consider some profit-taking at current levels.

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