|Big picture: gold is still under accumulation, at least as measured by Joe Granville's useful technical innovation called On Balance Volume. What Granville figured out was that you could take each day's volume and assign it an uptick or downtick based on wehthr the stock price rose or fell that day. same for a week. take the weekly volume and assign it based on net change for week.|
Over time, the OBV trend line shows whether the stock is being accumulated or distributed by smart money.
I am applying OBV to measure accumulation and distribution in GLD, the electroniically traded fund that has become the best most measurable proxy for the metal. While the traders are focused on the daily chart, which is fairly depressing and could make somebody throw in the towel on gold, I am encouraged by the weekly chart.
on balance volume, which is an indicator of accumulation or distribution, has remained quite positive on a week-to-week basis, even while exhibiting weakness on the daily chart.
Looking at this ETF, gold is now closing in on $160) after falling off its higihs in recent months. I see this as retrentching for a new advance, and have not changed my mind even in the last few weeks when the numbers have been pretty grim.
besides being a nice round number, $1,600 happens to be the 50 day moving average right now.
so breaking through 1600 is a strong objective for gold as it works toward reestablishing a bull market.
here is gold on a weekly chart with a 50-week (nearly one year) moving average.
by this weekend the price looks like 1600.
the chart should change TONIGHT to reflect the higher friday close for the week.
picking a moving average period of time is kinda arbitrary. I am using 50 weeks because it is close to a year and it lets me leave the parameters unchanged on stockcharts.
the moving average number to hit on this chart is $1626.