Tuesday, July 31, 2007
Saturday, July 21, 2007
Here are three charts all with similar patterns. So you have to ask yourself are these charts rolling over and overbought after such a strong few weeks in the gold market, or are they just getting started. Folks, differing opinions are what makes it a market. For sure something is going to happen. I have my opinion, but thats all it is. When it comes to trades like these I tend to try and find a contrarian twist in the chart paint job. For example; If you see a macd bearish cross, but its against a rising cycle, then consider the possibility that the chart is simply oversold in a uptrend. All timeframes must be considered simulataneously and momentum indicators used when appropriate.
Sunday, July 15, 2007
Two strong weeks in the XAU have produced a breakout on the ratio chart. As I suggested in the previous analysis the Gold and Silver charts have both suffered technical damage such that it could have been construed a serious breakdown was in progress. The action in the ratio chart suggests this is not the case. This footprint has been present in this gold bull market from the start. The metal charts must look dangerous for the shares to put in a cyclical bottom. The real question now is are we about to enter a significant bull market impulsive wave, or is this move just another move to resistance that will ultimately fail. Of course I don’t have that answer, but I think the ratio chart has shown us that the 0.28 area is very tough resistance and provides a good guide for timed sales.
I do find the ADX indicator status very interesting at this juncture. The indicator was primarily designed to reveal trend strength, and it is clear that this ratio chart has had a very week trend for some time now. You will also note there was not a real capitulation move in the ratio value. That of course makes sense with this very flat ADX line. In my opinion this is a clue that pressures are building up and setting the stage for a large rise in trend strength. This time period seems analogous to the 2000 period prior to the launch of the bull market. I am not suggesting with certainty that the next move is another major wave set up. There very well could be a clearing event related to the USD short position prior to a significant rise in gold. The USD chart has broken the falling wedge to the downside. This classical throw-over often precedes reversals. In any case we are officially on a buy signal in gold shares now. Just watch the chart carefully and don’t get too greedy.
Saturday, July 14, 2007
I've got two charts for you today. As many of you know I am a proponent of wave and cycle theory and as such I would like to present a observation. A key element of wave theory is alternation. I have been watching a fractal simlarity develop for several weeks now. As you can see in both charts the 2002 fractal is similar in many respects. I havent taken the time to research the ski setup, but It wouldn't surprise me to find that it was on a intermediate "not bull market" buy signal as we are now. In both cases the correction had pretty much run its course and the bulls were back in charge. The problem was there was a bit too much enthusiasm and a rising triangle wall of worry needed to keep it in check. I think the situations are similar. Technically, however, the current triangle rate is higher and that suggests stronger underlying strength. I will point out we cannot be sure what the triangle rate is until the breakout is confirmed. I do think that major lows must not break though for the triangle to be valid. Therefore I will say the recent cluster of lows in the 640 gold area and 320 hui area are likely to hold. That doesnt mean a full retrace can't occur. For now the charts are bullish on a intermediate cycle and likely to continue to rise to the top of the range. Thats not to say the daily charts arent overbought and susceptible to a pullback.
These charts suggest to me that there will be a final drop prior to a breakout to new highs. If its anything like 2002 that drop is going to feel like the end to the bull market. It will of course be your best long entry.
Wednesday, July 11, 2007
Sunday, July 8, 2007
Here's a quick update on CDE tonight. Cde followers will note the recent breakout over the 3.80 pivot. Just how important is this move. Counter trend moves can often be deceiving and get you on board at just the wrong time. So is this one counter trend in a on going bear market for CDE or is it the real deal. Well I'll just let you check out this chart. Something new is definitely up as the ratio clearly suggests. Of course we have a new set of fundamentals with the recent merger plan that is to make CDE the largest silver producer in the world. I won't get into the details of the fundamentals and the value of CDE vs say SSRI. There are some obvious benefits that SSRI holders have had over CDE holders for the last 3 years. However, in a pursuit of undervalued stocks, this one may have finally hit its low. It remains to be seen if they can drive dollars to the bottom line and increase shareholder value however.
Saturday, July 7, 2007
The count I have on the HUI is shown in tonights chart. This is basically the same as Rosen's count and is a pattern I suggested on the ski board several months ago. It is a textbook pattern found in Prechters elliot wave book. The alternative pattern would have involved a five wave "C" pattern that broke to lower lows. This pattern appears to involve a ending triangle to finish the consolidation and is typical of stronger bull markets. You may notice that this bull market still have no overlap with previous wave sets. Eventually that cease to be true as the sector overheats and makes a significant or secondary high. I still cannot rule out that the next move will be up into a secondary high that completes a larger count. We'll just have to see how it plays out. Rosen has suggested this patter is wave 2 in the main third wave thrust of this HUI bull market. If he is right then all hell is about to break loose in this sector. It could be. Anything is possible. If follow the posts here and the ski signals you should already be long, or may be taking some profits now. It's pretty clear the impulsive move off the 320 low is just about to ram into big resistance at 360. Fridays action was significant enough to be considered breakout action. However, key resistance is still above, despite the massive volumes on some issues. So for me I'm just going to play it like any other breakout play and sell a little on strength and buy it back on down days. The key will be to stay long mostly until a higher order sell signal comes up. Most of you know we have a somewhat long run pattern going now. That will likely end by Tuesday, after which some buys can be made on the retrace. If you use Fib levels then use a 38.2% retrace from the 320 low to whatever the high is. That would be my view for the most its likely to retrace given the bullish structure of this pattern.
There are many individual stocks that are showing first breakouts after long downtrends. I have posted about some of them. Also, follow Mootdisputes comments and links and you can see a very good ranking system.
Thursday, July 5, 2007
Please Checkout the Chart Links Below the Posts.