|
Finally, the gold stocks get their chance!
|
|
|
In my commentary of May 6 entitled "Are
inflation pressures under control?" it was observed
that along with the super bearish financial press pronouncements
on GM and Ford, "the recent spate of doom-and-gloom
headlines strongly suggests that the latest stock market
correction has ended and a short-term bottom is in."
This was confirmed by the 2-week blow-off rally currently
underway. But while the broad market, and especially
the tech sector, rallied, the gold sector got left behind
in the dust. Now, however, it seems, the gold will get
their chance to rally in the days ahead after spending
the last several days trying to establish the recent
bottom.
At turning points it's often possible
to gain a "heads-up" advantage over the field
using a reliable micro-term triple moving average series
that incorporates the work of the commodities trader
J.R. Maxwell (who wrote a valuable book on the subject
back in 1976 entitled "Commodity Futures Trading
with Moving Averages").
Maxwell used the 3/5/10-day MA combo but
I've tweaked with this a bit to make it more conducive
for stock trading to come up with the 3/6/9-day MA series,
the shortest possible daily moving average series for
stock trading without resorting to the tick chart. Maxwell's
3-day moving average can be applied in conjunction with
the 6-day and 9-day MA (especially useful for the commodity
stocks including the golds) to the leading gold stocks
in for turning point clues.
The chart suggests that the XAU
gold/silver index will rally in the days ahead with
the first nearby test at the 85.00-86.00 pivotal area,
and then possibly to the 90.00 level. The MACD indicator
is oversold and has traced out a potentially bullish
divergence relative to price in this indicator and the
9-day trend line (as shown below) has been tested enough
times in the past two months to suggest a breakout attempt
to the 85.00-86.00 area and possibly to as high as 90.00
before strong resistance is encountered. The action
of the past few days strongly suggests that last week’s
low will stand for the immediate-term.
***
Clif Droke is the editor of the 3-times weekly
Momentum Strategies Report, a forecast of U.S. equities and
markets. He is also the author of several financial books,
including "Stock Trading with Moving Averages."
For free samples of his work, visit www.clifdroke.com.
|
