Stock Charting: Gold Bugs Index, Health Care SPDR, Beazer Homes

As you can see, the AMEX Gold Bugs Index (^HUI) re-entered into its consolidation range after a sharp decline and spike up . I doubt that gold will shoot straight up a form a V-bottom. I think, in this case, it’s going to hang out around the 310-360 area. On the next successful test of support, it’s a buy. 310 is the absolute key support level. We’re still waiting on the final outcome of the bailout package which can change my opinion entirely.

A lot of the homebuilders look like they may be heading up. Two things can happen here: 1) you’ll see a nice large spike into that 80-95 range where it will consolidate, or 2) you’ll see a nice big reversal confirming that the 3-day rally was a reactionary rally. I think there is still considerable downside, not to mention the numerous resistance levels including the 50-day and 200-day MA’s. In my opinion, if you want to short the homebuilders, a higher probability short would be Beazer Homes USA (BZH). Watch for KB Homes’ (KBH) earnings tomorrow.

The Health Care SPDR (XLV) is a tricky one to figure out. It is near a short-term bottom, but it must hold this level or it will no doubt go to $29. The good thing is that you really can’t lose too much money trading the XLV. I would buy at a successful test at $30 but wait and see if it is confirmed the next day.

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