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Is gold bullion leading gold stocks higher, or is the current “wet noodle” action of
most senior gold stocks suggesting that the recent lows at $1540 will fail?
2. I don’t
think I’ll join the debate about whether the $1540 area is some sort of
“ultimate bottom”, but
I will suggest that both gold & silver seem to be getting ready for a nice rally.
3. Please click
here now. You are looking at the weekly chart for gold. Generally
speaking, I believe in the “three
strikes” rule. In baseball, it’s “three strikes and you’re out”.
4. In the 2011-2012
timeframe, gold touched key HSR (horizontal support and resistance) in the
$1577 area, three times.
5. In 2013, gold has
arrived there, for the 4th time. It’s unknown whether gold
rallies strongly from here. It’s also unknown whether gold will fail
here, and plunge lower.
6. I will suggest
that time in the congestion pattern “hourglass” is running out quickly, and a trending move,
either up or down, will begin very soon.
7. From a technical
standpoint, congestion patterns have roughly a 2/3 chance of consolidating
the primary trend (up in this case), and a 1/3 chance of reversing it. This
is clearly good news for gold investors.
8. Also, a poll
taken at the recent Dubai gold conference showed that about 63% of the
participants believed gold would rise to $3000 in 2014, and about 37%
believed it would fall towards $1000.
9. The poll and
technical analysis of gold’s congestion pattern are roughly in “agreement” that gold should move
higher.
10. Please click
here now. Right now, my focus in the gold market is this daily chart.
Technically, it’s looking better and better.
11. Gold is trading
in a range between $1540 and $1620. A move below $1540 would open the (trap)
door to about $1460, while a breakout above $1620 would suggest a rally to
$1700.
12. Note the position
of my “stokeillator” (14,7,7 Stochastics series).
It’s moved down nicely. In the $1615 area, I suggested that gold needed
to rest, due to the nosebleed level of the stokeillator.
13. Gold has rested,
and looks to me now, like it’s a cat that is stretching lazily, after a
wonderful nap. If I was a “dollarbug
mouse”, I would consider looking
for some serious shelter, very soon.
14. The red lead line
of the stokeillator sits near the 30 area, and
it’s beginning to turn up. There’s a chance that it could decline
towards the oversold area (below 20), if Wednesday’s critical FOMC
minutes report contains a bearish surprise.
15. Regardless,
I’m going to predict that Friday’s employment report is where Ben
Bernanke’s focus will be now.
16. Please click
here now. This shorter term hourly bars chart also hints that gold should
move higher. I think the next minor trend move will be a rally towards $1620,
rather than a decline to $1540.
17. There’s a
rough-looking head & shoulders pattern in play. If it fails, gold will
probably fall to $1555-$1560, before mounting a more serious rally. I
don’t think it will fail. I think the pattern will take gold up, to
test the key $1620 HSR area.
18. Please click
here now. You are looking at the daily chart for silver. My stokeillator “traded”
down to about 15, and is now hooking up nicely. Overall, silver looks better
than gold. Its strong technical position also adds weight to the argument
that gold’s rally can continue, even if it gets “whipsawed” by the release of the
FOMC report.
19. Most investors in
the gold community own a lot of gold stock, with an emphasis on the junior
sector. It’s been tough lately, but since the lows at $1540 occurred,
the juniors have been looking better than the seniors.
20. I believe that
it’s critical to keep an eye on trading volume right now. Some technicians say that following volume
is like drinking truth serum.
21. I don’t mind seeing the price of gold
stocks decline further from here, but if that happens, I want to see volume
decline, too. That’s bullish technical action. If there is a rally, and
I think there will be, I want to see
volume rise.
22. Please click
here now. You are looking at the GDXJ chart. If you can, check the volume
at the end of each trading day. Check it for your favourite gold stocks, too.
23. Do you see how
low the trading volume was yesterday? The price declined, and so did volume.
That’s bullish technical action.
24. If price rises
today, and I hope you all want that to happen, then volume should rise too.
The bulls are beginning to fight back!
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Thanks!
Cheers
St
Stewart Thomson
Graceland
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