Commodity Break Out & No HUI/Gold Action !?!?!?
If Gold & Goldstocks can not breakout thru prior resistance on this massive breakout in commodity's...goldbugs have a problem.
I don't look at the COT's the same way many traders do... the info is never "current" and knowing what someone "was" doing, is not the same as what they "are" doing - as far as trading in the here & now...
I see traders chirping positively that the lower Short Position by the Commercials in Gold is great news and that this opens the Door for Gold to Rally here...
WRONG.
...wrong, if they want to cap Gold's rise - because they have presciently reduced positions and now can redeploy capital once again on the Short side.
I am a fundamentals oriented trader, but do monitor a variety of technicals. What specific Individual indicators are most effective changes with differing market environments.
Here's a Chart that shows the simplicity of the 50 & 200 dma, Moving Averages being used to indicate Buy/Entry's & Sell/Exit's on the top half of the Chart...and on the bottom is a more "Fundamentally" oriented indicator of the divergence between the HUI stocks and the Price of Gold.
Both have their own individual value, but used in conjunction with other indicators (not shown), both have their value enhanced.
The HUI:GOLD indicator has been an extremely accurate indicator - especially when used in conjunction with other more accurate shorter term momenteum indicators - at identifying both interim Tops and Bottoms.
Charts furnished courtesty of StockCharts.com:
stockcharts.com
[HUI Chart]
stockcharts.com[g,a]daclyyay[d20001101,20050630][pb50!b200!f][vc60][iut!lj[$gold]][J54037815,Y]&listNum=2
Here's a chart that shows the early support line in this HUI Cycle - that has now clearly become the "resistance line" for the newly established support line of this move.
[HUI Chart]
stockcharts.com[d,a]daclynay[d20020801,20050801][pb50!b200!f][iut][j56199164,y]&listNum=2
The importance of technically taking out what will be a "Triple Confirmation" point of HUI 207ish (again, I want to see 3 consecutive daily closes above that level) is that it takes out the prior high of this move up off of the April/May bottom, the 200 dma AND the new overhead resistance line - that was a prior support line, earlier in the cycle.
Money Flows per the earlier individual HUI component Charts I posted has shown imo, that Gold Fund Managers are clearly low on cash - have been selling everything on any & all strength and have been consolidating their positions into the handfull of leadership stocks within the HUI that have shown technical strength and have the common Fundamental components of a low cost structure, positive production/reserve growth and value oriented management.
Watch the money flows in the laggard HUI components ( I'll reveiw them later tonight & try to post them)...THAT will be a very prescient indicator of when & if the HUI makes a break.
Personally, My Profits off of this Trade off of the April/May Bottom are safely in the Cash Register, other than my minimum core holding level and I'm waiting for that somewhat rare circumstance where a move can simultaneously give us a "Triple Confirmation" that really endorses the sustainability of an ensuing Rally for the HUI stocks.
- taking out the prior high, the 200 dma and upper resistance and holding that close above those levels for 3 consecutive days - is the inducement I need, to put more chips back on Ole' Yeller.
It's going to be real interesting here to see if the Commercials redeploy some ammunition here and whether Gold can break thru this key resistance level to lead the HUI Stocks higher.
I really feel that GOLD the metal, is going to have to lead the HUI stocks higher on this move.
...I will take what the Market give me.
It just gave me 40 Index Points and now it's at a key pivot point without attractive Risk:Reward Metric's.
I'm willing to re-enter and ride the HUI higher on "Triple Confirmation" of the sustainability of the move...but, I'm equally predisposed to ride her to the downside if we fail at resistance once again and roll over to re-test this move and/or even move to retest lower levels of support in that 138-154 level.
This pivot point is overweighted with RISK and underweighted with REWARD...ie: the total trading range of the HUI over the last 6 weeks incredibly has only offered an 11 point and 5% Trading Range.
I prefer to let "others" absorb the overweighted RISK here and to keep my REWARDS safely tucked away (vbg).
I have a feeling we aren't going to have to wait much longer...
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