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Gold Retains Bullish Rating Despite Weeks Lackluster Performance

Commodities / Gold & Silver 2009 Jun 27, 2009 - 06:44 PM GMT

By: Merv_Burak

Commodities

Best Financial Markets Analysis ArticleGold tried to rally during the week but the overall action was not too impressive.  I guess the world is just not ready yet to collapse into ruin.  Individuals, well that’s a different story.


GOLD

For the next few weeks the commentaries will be short.  It’s the vacation/gardening/beer guzzling period with a few weenies and burgers, even a steak or two, thrown in for good measure.

LONG TERM

Nothing during the week has changed the basic long term position.  Gold price remains above its positive sloping long term moving average line and the momentum indicator remains in its positive zone (using the daily data version).  The momentum is, however, still slightly below its negative trigger line.  As for the volume indicator, it remains positive and above its positive trigger line.  Nothing during the week caused a change in rating, therefore the rating remains BULLISH.

INTERMEDIATE TERM

The price of gold moved below its intermediate term moving average line for a few days this past week but ended above the line by Friday’s close.  However, Friday’s action could be perceived as a reversal day so I would not get complacent about the price being above the moving average line.  The moving average remained in a positive slope throughout, which is still a positive sign.  The momentum indicator has remained in its positive zone all week but below its negative trigger line.  It did move above the trigger on Friday but the slope of the trigger line remained downward.  As for the volume indicator, it continues to trend higher but has not yet breached its previous high reached in late May.  Still all things considered, the intermediate term rating remains BULLISH.

SHORT TERM

We have been in a decline for a few weeks now but during this past week things firmed up somewhat.  The price of gold closed the week above its short term moving average line but the line still has not reversed its slope to the up side.  The momentum indicator has been toying with its neutral line but closed the week just a shade below the line in the negative zone.  It is, however, above its positive sloping trigger line which counts for something.  Throughout the recent price decline the daily volume action had been diminishing, which is usually an encouraging sign.  However, on the recent up days the daily volume did not improve.  Now this could be just that many speculators are taking early leave for the July 1st and July 4th holidays so we’ll just have to wait until the holidays are over and see if the volume comes back.  In the mean time the short term rating has improved from last week. It is now at a + NEUTRAL rating, one step below a bullish rating.

          

As for the immediate direction of least resistance, well baring any surprises on the global political/economic scene, I expect that to be in the lateral to downside direction.  The Stochastic Oscillator is almost into its overbought zone while the Friday action has the looks of a reversal of direction sign.  The Friday candlestick is what is sometimes referred to as a “long upper shadow” (I don’t make these things up).  It is often a negative sign so we’ll have to see how this develops.

SILVER

During the week gold ended up a little while silver ended down a little.  The difference being the degree of the Monday drop and subsequent slow recovery.  This difference in performance resulted in silver intermediate term rating diminishing from its previous bullish rating.  The silver price finished the week below its intermediate term moving average line.  Although the line is still very slightly positive the lower close did change the rating to a – NEUTRAL rating.  Confirming the rating reduction was the move by the short term moving average line below the intermediate term line.  This normally results in further down side action by the price.

As one can expect, the short term rating remained BEARISH as nothing happened during the week to change that.

PRECIOUS METAL STOCKS

Wouldn’t you just know it?  No sooner do I complete the development of that new Penny Arcade Index (shown last week), which showed a spectacular Index advance since the end of last year (up almost 500%) but the Index takes a dive for two weeks in a row, up to this point.  I guess what goes up must come down, especially if you are a pure speculation or gamble.

This past week we saw a divergence in performance between the higher quality stocks and the lower quality ones.  While the major North American Indices and the higher quality Merv’s Indices had a relatively good week the dogs did not.  The Gamb-Gold Index and the Penny Arcade Index were the only North American Indices to move lower this past week.  The new McEwen Junior Gold Index (not yet part of the Table) ended the week with a weekly decline of 6.07%, however, this is due to the method of Index calculation.  The AVERAGE price of a component stock declined only 1.00%.  Still the higher quality were the winners this past week.

Merv’s Precious Metals Indices Table

Well, that will be it for this week.

By Merv Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
for Merv's Precious Metals Central

For DAILY Uranium stock commentary and WEEKLY Uranium market update check out my new Technically Uranium with Merv blog at http://techuranium.blogspot.com .

During the day Merv practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv dons his other hat as a Chartered Market Technician ( CMT ) and tries to decipher what's going on in the securities markets. As an underground surveyor in the gold mines of Canada 's Northwest Territories in his youth, Merv has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv's driving focus is to KEEP IT SIMPLE .

To find out more about Merv's various Gold Indices and component stocks, please visit http://preciousmetalscentral.com . There you will find samples of the Indices and their component stocks plus other publications of interest to gold investors.

Before you invest, Always check your market timing with a Qualified Professional Market Technician

Merv Burak Archive

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