Strictly: Drilling II Message Board

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Strategies & Market Trends : Strictly: Drilling II

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To: Frank Pembleton who wrote (18566)	9/9/2002 10:51:42 PM
From: Little Joe	Read Replies (3) of 36161

Update or CRB Index. A lot is happening since my last post regarding the index. I cannot post the charts I use as they are from the Worden Brothers System and I don't know how to post them, but I will post a few links to similar charts that will help to understand my commentary. The last two days the index has gone vertical. The high today was 228 and the close was 227.50. The index closed +8.55 which is a very healthy move. 234.38 is the mid-point of the W formation and if this level is pierced significantly (rule of thum 3%) on good volume the double bottom is in. However Wilder RSI and MACD are over bought both near and long term. The near vertical rise of the last two days is a sign of a potential blow off. My best guess is that the high of 234.38 will not be breached on this move. I think the index is at exhaustion level and will be unlikely to reach a new high without a corrrection before it breaks out. However, and, this is important, if the index can break out on this move without a significant correction on high volume I believe it will be the sign of the bull for gold and the commodity markets and a sure sign inflation is on its way. It would take an incredibly powerful move for CRB as overextended as it is to break out of a double bottom here. I believe that if that happens it is due to a seminal event that will change the picture profoundly. We may not know the fundamental reason for the change for months, but that is what will be signalled. The action described above is also confirmed by some of the leading gold stocks such as GLG, HGMCY and GG which are over extended and challenging their highs. Also, gold and silver are overbought, if they keep moving when overbought that is the definition of a bull market. I have some profits in my calls on GLG purcahsed last week, but I also have a lot of dry powder. Keep a close eye on the situation, I think it will tell us a lot. Little joe

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