Saturday, August 7, 2010

GLD Buy Signal - $BPGDM

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This chart comes to us courtesy of one of my ingenious website readers, Bob McJoySteinski.  Bob and I have been dialogging on the subject of how to reliably use the $BPGDM to generate BUY/SELL signals for quite some time now.  I don't think we have all the details figured out, but we are working on it.
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Bob's invention is to use the Zig-Zag overlay at StockCharts to graph the $BPGDM.  The GLD price movement itself is superimposed behind the Zig-Zag.  
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As you can see, the Zig-Zag has just turned north giving us a BUY signal on GLD ($BPGDM closed up Friday at $45.16).  As long as the Zig-Zag continues to climb upwards, the BUY signal is valid.  
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I think it would be prudent of me to observe that the Zig-Zag technique, while excellent, does have a delay in it's signal.  Which is to advise that GLD, while appearing to be beginning a new trend direction as far as the $BPGDM indicator is concerned, has in fact been trading higher for many days now.  
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In other words, if GLD needs to take a breather this week (trade lower), it will.  And you may be disappointed if you put all your confidence in this one indicator observation for the perfect time to buy a short term position.
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You may also see and tinker with his chart directly here at Stockcharts.  Thank you, Bob!
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Click on the chart to ENLARGE

1 comment:

  1. This is OK for buy signals.
    Worthless for sell signals.

    ReplyDelete