Poster’s Paradise

First lets look at GLD and its recent actions. Several weeks ago I posted a chart of a bullish rising wedge for GLD characterized by the 2 triangles that make up the first 2/3s of its length. You can see by looking at the chart below how the wedge has matured with a little false breakout thru the top blue rail of the wedge formation only to pull back inside. If you follow any of my TA you know that I love it when a small flag or consolidation pattern forms just beneath a resistance rail or just above a resistance rail or as in our present case with GLD, right on the resistance rail. This little flag has taken right at 2 weeks to form and is very healthy for GLD going froward.We had a gap open this morning just over the top blue rail of the bullish rising wedge. We are currently closing that gap and possibly finding support on top of that top blue rail as we speak. It is possible that we make one more trip back down to the bottom rail of the little red flag we have created before we truly break above the 1000 area and hold our ground. Both the bullish rising wedge and the little red bullish rising flag are signaling that we have a strong uptrend in place and the consolidations just under the 1000 mark on GLD is a very positive developments IMHO. When you look at the chart of GLD below , KNOW that this is what a bull uptrend looks like with one little consolidation pattern after another forming the uptrend channel. This same pattern will show up on your individual PM stocks when they start their own bull trends.

SLV had a near vertical rise after breaking out of it’s little bullish rising wedge pattern 2 weeks ago and is now taking a couple of days rest before it starts it’s next leg up. Its taking about 3 or 4 days for SLV to transverse from the bottom of the little red rectangle to the top and the same coming back down to the bottom of the consolidation. Folks this is a healthy development believe it or not because without theses little consolidation pattern forming, the rally would burn itself out in no time, just like a sprinter gets tired after a 100 yards. We want a good mile runner in here that can pace himself and have a good kick left when we come into the home stretch.

With GLD and SLV in small consolidation patterns, it might be possible for the HUI and the XAU to maybe take charge in here and start to lead the metals for a change. This would be a good spot for that change to start as the HUI and the XAU are looking like a couple of high priced racehorses, chomping at the bit to leave the starting gate, the top rail of their bullish rising wedges, and begin the race for the roses.

Below is a chart of ECU’s last major rally leg up and it’s 3 consolidation patterns that formed the uptrend channel.

All the best…Rambus