IS IT GOLD WAS IN BUYING MOOD ***************************** Gold suffered another tough session yesturday, dropping nearly 2 percent following a bad week. But one of the most respected technical analysts on Wall Street says its high time to buy in. Indeed, Sterne Agee chief market technician Carter Worth predicts that gold will rise about 15 percent from current levels. After a painful 2013, bullion was finally finding some strength in the beginning of 2014. The key, for Worth, was that the metal was able to turn around a grim trend. When youre cascading, you make a low and then you violate it. And make a low, and then violate it. Make a low, and then violate it. Low after low, Worth said Friday on CNBCs Options Action. But then, we have this massive low in June, as everyone knows, and again, we have a rally. But this time, we dont violate. So we have a well-defined double bottom. For Worth, the fact that gold—and the SPDR Gold ETF, which is what he charts—found support at the prior low around USD 1,180 is a clear indication that the selling is over. This is emphasized by golds break of its persistent downtrend. After it bounced off of that low again in December, gold was able to move above the bearish trendline that had dogged it. Its a major break above the downtrend line, Worth said. That shows the import of the strength that begin this year. Finally, Worth points out that golds 150-day moving average has stopped declining, and has gone flat. That transition in the moving average is the definition of what I would characterize as a bearish-to-bullish reversal, Worth said. To devise a target, Worth then looks to where gold has been. Gold futures peaked around USD 1,925 in September 2011, and bottomed at about USD 1,180 in June 2013. Worth expects gold to retrace about half of that move, bringing the metal back to USD 1,500. Wed play it on the long side, he said. To capitalize on a potential upside move driven by sentiment, Mike Khouw of Dash Financial recommended buying the June 130-strike call for USD 3.50.
Posted on: Tue, 25 Mar 2014 06:26:16 +0000
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