There are 3 long term trend lines to look at in Gold.
The First extends back to the Sep 2009 low at 1022 Hits at The Feb 9th 2010 low at 1070-=– It projects support at 1350.. HMMM
The second Starts at the Feb 9th low at 1070, hits on the July 28th 2010 low at 1071and projects support at 1485.
The third is one we just bounced off at 1572… It starts back on July 28th at 1071, hits again at jan 27th tick at 1318 and projects to the 1575 level.
I noticed today that Cramer is friendly gold. He didn’t mention this trend line. But I can assure you he looked at it.. He’s friendly gold looking for a bounce off this trend line. Ironically, I actually agree w/ being friendly on this break. Which makes me VERY uncomfortable… What could we bounce up to? How about 1666 and then 1690.
You might consider doing a 1670-1800 call spread.
More on the grain rally later. But it looks like we are finally getting our first weather scare. If it stays hot in Argentina and Brazil, we’ll get a bounce. Its already been dry for a bit. If its still Dry in 5 weeks, you’ll have Al Gore down in Brazil standing in his speedo talking about global warming again… UGH….
Weather markets are great. Until they are not.
However, with Corn at 9 month lows, Beans at 14 month low and wheat at 16 month lows, we are over due for a bounce. I have been bullish grains for the last 50 cents. So, Caveat Emptor. I have been waiting for this bounce for 3 weeks. It could be temporary, or it could be the start of a really nice correction. Corn had a 2.00 dump off its highs. Beans had a 3.00 dump, poor wheat lost close to 4.00..
Buy these grains at your own risk, but I am friendly.
The only way to do this is to have a good sell stop below, buy it and then don’t look at the screen for 4 weeks.
CER