Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Downward Spiral Targeting Primary Up-trendline at $840

Commodities / Gold & Silver Mar 23, 2008 - 05:16 AM GMT

By: Merv_Burak

Commodities

What does one say after a week like this past one? Memories of an old movie come to mind and the saying “it was the best of times, it was the worst of times”, then off they went to the guillotine. Those with their heads still intact might eventually benefit down the road.

GOLD : LONG TERM
For those with a long term focus the long term P&F chart suggests that there is still no worry about a bear market. The price of gold would have to drop to the $885 level to break below both a (secondary) up trend line and two previous lows, or more importantly must move to the $840 level to break below the primary up trend line. Should such a break come, that would project down to the $720 level for now, but first things first. Let's check where we are with the normal charts and indicators.


As shown on the intermediate term chart below, gold is still quite some distance above its positive sloping long term moving average line. Looking at a long term momentum indicator on a daily chart, the indicator took a sharp dive during the week, broke below three month support levels and is now at its level back in December. It is still, however, in its positive zone although it is below its long term negative sloping trigger line confirming the direction of the momentum (i.e. strength of recent price action) to be downward. Although I do not have the Thursday data the volume indicator still appears to be positive, above its long term positive trigger line.

Putting everything together, the long term rating continues to be BULLISH although starting to weaken.

INTERMEDIATE TERM

While writing last week's commentary I must confess that I did not expect things to happen as quickly as they had, although the warnings were all there. Both the channel support line (possibly called the fourth FAN trend line) and that momentum trend line shown last week, were broken on Wednesday. Now comes the real tough part, has the blow-off stage ended? I would be inclined to say YES, although a confirmation would be the breaking of that third FAN trend line shown just below Thursday's close. My one cautionary comment last week about the use of that third FAN trend line as the blow-off line was that it was too far away from the price action. That lower channel line seems to have solved that problem and I consider it as a rare fourth FAN trend line and a valid blow-off line.

So, where to now? Also mentioned last week was that second FAN trend line as a possible goal. At the present time it is at about the $710 level and rising. That would confirm the long term projection, once the long term breaks down (see above). Everyone likes projections but one should not take them as a given. Projections are just educated guesses. Let the continuing market action be your guide as to what's happening and which way things are proceeding.

As for the normal charts and indicators, the Thursday's close was below the intermediate term moving average line. The line itself has turned but only to a horizontal position. It will still take another day of trading below the moving average line for the line to fully slope downward confirming a change in direction. As we see, the intermediate term momentum indicator took a sharp plunge and is now back to its level in August. It is, however, still in its positive zone although below a now negative sloping trigger line. As for the volume indicator, up to the Wednesday's action (we do not get Thursday's volume data until Monday) the volume indicator is still above its positive sloping trigger line. Assuming a significant volume on Thursday it is likely that the volume indicator will drop below its trigger line but that the trigger line may not yet turn downward. Keeping all of the above in mind the intermediate term rating is in flux and somewhere in between a – NEUTRAL and a BEARISH rating. I'll call it a NEUTRAL rating and see what develops on Monday.

SHORT TERM

What a miserable week. Will it continue, is what most want to know. Well, I don't know if it will continue but let's see what we can decipher from the chart and indicators.

First, everything is now pointing lower. Gold is now most definitely in a downward spiral and is below its negatively sloping moving average line (15 DMAw). The short term momentum has plunged below its neutral line into the negative zone. The price action has broken below at least two up trend lines. The volume indicator is the only positive in the picture but the data is only to Wednesday and if we can assume Thursday's volume we are also in the negative here. The short term can only be rated as BEARISH .

What else is there? We now have the very short term moving average line (8 DMAw) below the short term (not good). The momentum indicator is lower than it was at the start of the recent rally, in December (not a good sign). The more aggressive Stochastic Oscillator (SO) is also below the levels of the past several months. Although not good either, it has entered its oversold zone. This then allows for some hope that a rally of sorts, or at worst a lateral period may be in the cards just ahead. However, looking at Thursday's action we see what is sometimes referred to as a “Long Upward Shadow” in Candlestick language, where the body is inside the bottom one third of the full trading range. This is thought of as a bearish signal. Unfortunately, except for this possibility of a rally ahead, there is nothing much one can grab on to as bullish in these indicators.

This seems to be a good time to sit back and relax until some turn around has been verified. Yes, I know, one might just miss the absolute bottom but there might be many times along the way that one might just miss the absolute bottom, before the absolute bottom comes along.

SILVER

It's not surprising that silver took a bigger hit this past week than gold. It had a better advance since the August low so the bigger up, the bigger down. Looking at the intermediate term gold chart above and comparing it to the silver chart there are some interesting differences but in general the two have been acting together. The notable difference is the rally since December.

The silver upside strength exceeded that of gold with the silver momentum indicator breaching its overbought line while gold was some distance from its line. Silver did not indicate any strength decrease until the past several days, and then it gave a warning of a possible top somewhat better than did gold. Now, silver is driving the down side. Unlike gold, the silver intermediate term moving average has already turned downward. The intermediate term momentum indicator is closer to going negative, in fact the momentum is reading 50.00 and couldn't be any closer to going negative. Again, unlike gold where we have an intermediate term rating not quite fully bearish yet the rating for silver is BEARISH . 

Precious Metals Indices

The table of precious metals Indices is a disaster. Double digit losses all over the place. The only positive in the table is the U.S, Dollar Index, which is thought of as a contrary indicator and doing its job. The quality stocks were the ones that took the biggest hit during the week. All 30 component stocks in my Merv's Qual-Gold Index lost ground during the week. Is this the “quality” long term “investor” jumping ship? Overall, there were only 10 winners in my universe of 160 stocks. That's only 6% on the up side. A really bad week.

Despite the run up in the larger gold stocks, as indicated by the major North American Gold Indices moving well into new high territory, the vast majority of stocks have gone nowhere over the past year. The chart of the universe of 160 stocks, as well as the speculative and gambling stocks, suggests that for the past year there has been a topping activity going on. If so then we may be in for a worse market in gold stocks than anyone is expecting. I hope I'm wrong in this assessment but that's the way it's beginning to look. Of course, should the speculative stocks plunge further the quality may not necessarily follow immediately but follow they will. In checking the table each week, should we see the Merv's Gold & Silver 160 Index climb past the 2820 level we will then know this assessment was wrong, however should the Index drop below the 2450 level we know we're in trouble. Next would come support at 2150 and below that who knows, by that time everyone should be out of stock and just relaxing and taking in the scenery, waiting for the bottom and a new bull market.

Merv's Precious Metals Indices Table

 

That's it for another week.

By Merv Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
for Technically Uranium with Merv

Web: http://techuranium.blogspot.com/
e-mail: merv@themarkettraders.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 .

This Blog is - A periodic review of the daily or weekly market action in uranium stocks. The review is strictly from the technical perspective. Merv is a pure market technician. Weekly, one will find a table of technical information and ratings of the 50 component stocks of the Merv's Uranium Index as well as a weekly summary of the uranium stock activity. Daily (most days), one will find a daily review of the market action of the Merv's Daily Uranium Index as well as technical analysis of one or more uranium stocks of interest.

Disclaimer - Technical analysis is not perfect. Should you expect perfection this is not the site for you.
Technical analysis IS a very sound technique to assess the daily or weekly trading activities in securities and to assess appropriate timing of investment activities. This blog provides such technical analysis of the trading activity in uranium stocks for your information. Any use made of this information is strictly at the users risk. No guarantees are made for the accuracy or potential for the information provided herein. Use at your own risk. You are strongly advised to check with your broker or investment adviser before activating any investment desisions.

Merv Burak Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

sandeep ghai
24 Mar 08, 05:04
Great information given by you thanks

Dear,

I just want to thank you for the information which you have provided for us.

Thanks.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in