Sunday, October 28, 2007

Gold Impulsive

For the last several weeks the issue in the gold share trading has been in deciding if this move in gold is the real thing. In terms of wave theory I have been looking for clues such as we are getting right now. I submit the count above. If it is correct then gold will go much higher before a substantial correction. In fact , it seems to me we are in for a major move here. The gold waves are expanding. You can see my 1 of 5 count is pretty big itself running some 100 points. so you can imagine how far this can go if the fib extensions work out. Anyway, I know anything can happen, but I'm pretty much convinced this is a impulsive move and the 2006 corrective pattern is over.
S.M. Himes

Thursday, October 18, 2007

Never short a dull market

Why do they say that? Well I guess because the overbought indicators are relaxing on weak selling in a bullish phase. Is that what we have today? Could be. The bears have plenty to point to though. For one, we have record commercial short interest and rising lease rates. Ok, so they are borrowing to short. Fine, it still doesn't mean the commercials have control of it yet. Even if they do get control, now look at how much they have to cover. We also have a crashing dollar, and many expect that should cause gold to go ballistic. Since gold is up modestly that is considered bearish for gold. I do not believe that to be the case. A big move in gold is not bullish, its bearish. Thats how the commercials would get it to tip over. The fact gold is firming withing its well defined channel is bullish. Heres a chart of the HUI which shows a very parallel set of moving averages and so far price action holding well to the 13 day ema. Thats bullish. In fact, several more days in this 400 area may just confirm it as support and setup and even strong trend continuation. Judge your junior holdings by how well they firm up at support. Look for trend channels to develop. This is how a major move occurs. Major moves do not just "lift off". They take time to setup a solid investment trend.

Wednesday, October 17, 2007

1:30 pm et, XAU is at support

Xau is at support of the impulsive uptrend that has been in place for a few weeks now. Now we need to watch for a trendline break off the negative divergence on the daily macd. I see a couple of possibilities for the seasonal weak patch that is supposed to come here.

1) we now get a ending diaganol which would result in a very sharp and full retracement of the impulse pattern. This could take time to play out, but the good news is it would present a great opportunity to position.

2) We get a modest abc correction starting right now and the wave continues to propagate toward some hideous point and figure target over 230.

3) the ending diaganol pattern is not ending but leading. This goes to my post yesterday. It's wild to imagine such a thing, but a leading diaganol is the start of a major wave. If that were the case then this bull would officially be in runaway mode.

I might add, if this is an ending diaganol then it is going to really frustrate both bulls and bears. The patterns typically do not just end as soon as a "e" count is reached. Expect a drifting up pattern as xau stretches to a extreme.

S.M. Himes

note, blogger image upload is down, I will post the chart later.

Tuesday, October 16, 2007

The trend is your friend until the end

unless of course you are on the wrong side. So, have you been picking tops lately? Sure there will be one eventually. Do you think last week was it on HUI? We all have various forms of estimating the trend duration. It's good money management to know your limitations and trade the plan so to speak. Is that not true of this bull market? Well, I obviously have been doing some soul searching in an attempt to "know thyself". You see, all the technical analysis, cycle work, et al, boils down to the simple trend. So if we just focus on the trend and what the expectations are for the trend envelope we can probably do quite well in this sector. So why do many loose money in a gold bull market? I think its because of fear and possibly over analysis. The only gold bull I can reference is that of the 70s into 1980. My studies of that bull have shown that the tide rose on a geometric basis. That is, the successive rises were multiples of previous ones. Its not so evident that that is the case until you are multiplying big numbers. Anyway, it seems most probable this bull will do the same. So let me suggest a paradigm shift. It's been many years since gold traders had to deal with the concept of irregular corrective waves. Alf Field has done a great job of analyzing these waves of late. What you see is the corrective C waves not falling below the corrective A waves. In fact I would submit as the geometric rise continues the whole corrective patterns may trace out new highs. That may sound heretical to the wave theorists, but remember wave theory is just a labeling scheme. It has NO PREDICTIVE ABILITY! There , I said it. If you understand the structure of the pattern that is evolving , and that is a big IF, then of course it will appear your theory predicted the results. However, the wave does what it wants, you may be lucky enough to guess. So to make a long story short tonight I'll leave you with this. In a bull market that is going through puberty, understand the adolescent is going to show some adult traits. Also understand the adolescent is going to still act like a kid at times. However, this is the most important part, most of all understand that the adolescent is alot closer to becoming an adult than when you first were introduced to the little toddler. So in terms of risk / reward, it is now that time where its worth the stay to see this thing through. Accepting the bull market envelope and the geometric progression at this adolescent stage means to stop trading so much and start seeing the big picture. Most of you understand the big gains are made near the end. Well, you have the good fortune of being in the middle where shares are still kind of cheap and the big money is not that far off. I hope my little missive tonight has helped. I for one refuse to view this bull market pessimistically. You will remember the words of Jim Sinclair when it comes to how to survive and thrive in this sector. Go read him again. Sure , he may seem a bit of a nut, but the reality is the rest of the TA guys are going to get you out when they should keep you in. JS has the credentials in this sector, not to mention the genes.

S.M. Himes

Sunday, October 14, 2007

Xau Chart updates

Here are xau charts for intermediate and long term. As you can see our bullish RST setup has confirmed to the upside and a trending move is underway. Momentum traders will want close stops in here since some kind of retracement is possible at any time. However, the trend is up and some targets as high as xau 240 are possible on this run. The more important chart is the long term chart. The implications of this chart breakout are simply huge. It seems to me that a multi decade line of resistance will take some time to become support even after the first stab through. Trading around this pivot line is likely to be difficult to say the least.
S.M. Himes

Gold Seasonality

Gold Seasonality
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