Friday’s ETF Chart To Watch: SPDR Gold Trust (GLD)

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Stocks soared into bright green territory as investors looked beyond the damages inflicted by Hurricane Sandy, focusing instead on the plateful of positive economic data at home. Weekly jobless claims bolstered confidence as fewer people than expected filed for unemployment; furthermore, an uptick in ISM and construction spending data also helped restore optimism on Wall Street and open the doors for the bulls [see How To Pick The Right ETF Every Time].

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With the presidential election coming up next week, all eyes will be focused on the latest employment report as investors and critics look for an improvement in the sluggish domestic labor market. As such, our ETF to watch for the day is the State Street SPDR Gold Trust (GLD, A), which may experience volatile trading depending on the latest jobs data. Analysts are expecting for non-farm payrolls to come in at 120,000 while the unemployment rate is expected to come in at 7.9% [see GLD-Free Gold Bug ETFdb Portfolio].

Chart Analysis

GLD appears to have completed a healthy correction since failing to summit historical resistance near the $175 level in early October of this year. Despite enduring a fairly steep pullback throughout the entire month of October, this ETF has managed to hold support at $165 and recent price action suggests it’s well on its way to resuming its uptrend (blue line). Entering into a long position at current levels may be enticing as traders can tap into lucrative upside potential, while at the same time setting a fairly tight stop-loss around $164-$165 a share to protect themselves in case profit-taking pressures resurface [see 3 ETF Trading Tips You Are Missing].

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GLD

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More conservative investors should exercise caution, given the fact that GLD has previously staged a “false bounce” since hitting resistance at $175 a share in late 2011 and early 2012, only to post lower-lows in the following weeks [see 101 ETF Lessons Every Financial Advisor Should Learn].

Outlook

If the latest employment report sheds optimism on the domestic recovery, gold prices may tumble lower on the day; in terms of downside, GLD has major support at $164 a share. On the other hand an uptick in the unemployment rate could inspire a rally for safe havens; in terms of upside, GLD could face near-term selling pressures around $170 a share, while major resistance lies at the $175 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

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Disclosure: No positions at time of writing.

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