The behavior of gold and the SPDR Gold Shares (GLD) recently has been fascinating. Let's notice that the GLD has continued to carve out a series of higher lows off of the January 15 pivot low at 78.73. It has been doing this despite a stronger dollar and an overbought condition. Perhaps all this good news about more government relief (read: deficit spending) is underpinning gold, as it attracts capital that is frightened by the unintended consequences of global government spending gone wild? In contrast, the climb in equities feels like short covering, while the holding power of the GLD represents the behavior indicative of a bull market.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.