Slider, I'm still a walrus re gold, hoping to soon turn bull.
Why?
Starting with the following chart:
stockcharts.com[l,a]waclyiay[df][pb50!b200][vc60][iUe12,26,9!Lh14,3]&pref=G
The chart contains two indicators that give very good dual buy/sell points. A PPO crossover up, combined with a slow stoch crossover up is very bullish. Likewise a PPO crossover down, combined with the slow stochs turning down is bearish. It is easy to see that things don't look too bullish here. One can supplement by looking at the dailies, for slightly better timing.
stockcharts.com[l,a]daclyiay[dc][pb50!b200][vc60][iUe12,26,9!Lh14,3]&pref=G
The other thing to note is that the recent momentum cycles in gold equities have been very consistent, at roughly 2 quarters per. Assuming continuation we have another month left in a down. Then we should go through a up/basing period, maybe another 2 qtrs, probably less. (I don't agree with George, we are not quite basing here, we are in a correction.) Following that we hopefully will get a powerful move up.
So where does this leave us?
Timing wise it would leave us with bottom in about a month, followed by some basing to net up, followed by a powerful upsurge starting before mid year next year. How does this coincide with present general markets? It would coincide with a rising market starting about now, and peaking out before 1st half of next year, with a huge dump occurring in the latter half of '03 and early '04. The dump will probably be on the order of 5000 DOW points per present estimates, from around 9000.
The dump would also likely presage a huge economic recession, which is likely to start late '03. The BOP will be way out of hand by then, the consumer will be further on the road to being a non-consumer, unemployment will be higher, and Green jeans will have wrung a good deal of what is left in the refi biz. In the meantime the dollar will have peaked, maybe higher than most presently think. The reason for the latter is that the rest stinks, especially the Euro. So what has the dollar got to fight against. Nothing except gold.
We can supplement the above with some EW (Elliot Waves). Back to the weeklies on the XAU. Since the peak it has been in a clear 53(5?) sequence down, or an AB(C?). It is easy to count and has not wavered. We are presently at the end of the 1 of the last 5. Until it breaks this sequence - it doesn't, and assuming continuation we have a little up, a down, another up, following by a last down, all to go yet. The C should be as long as the A or longer. Voila, if we look closely, we come up with my previous mentioned number of about 45. How convenient. A nice double bottom.
TA, whether it be dual indicators, EW or whatever can change in a hurry. I thought the 535 sequence was in danger about mid Sept. But it held. Until it breaks I'm sticking with it.
Gold is also in a clear 535 since the peak. EW of the gold weeklies would end the ABC correction at about 295. The other interesting thing about this is that this ABC could be the end of a 2 of 5 in Gold, on the weeklies. For those that don't understand EW, this situation if true, is bullish bullish and more bullish. Continuation of the 5,from the 2, means the next wave up will be the almighty 3rd, and will probably power gold up well beyond 400 (maybe even quite a bit more).
We discussed where we were regarding EW of the XAU, several times earlier this yr on this thread. A lot of things never worked out for us, but I've stuck with it, and the above scenario re POG (which EW's as well) only recently dawned on me. I think with gold we all too often look at the dailies, and there is perhaps more meat in the weeklies.
I am currently gaining more confidence that this is the present situation, and LT it is very bullish! In the interim it requires just a little more patience, due to the volatility of gold equities.
What would negate the EW situation described in gold? A clear break below about 295 imo. This would really be bearish.
stockcharts.com[l,a]waclyiay[df][pb50!b200][vc60][iUe12,26,9!Lh14,3]&pref=G
In looking at all this there are some key issues that could throw a monkey wrench in the works. Rogue events as you so often mentioned are one. The other is a general market rebound, which I think is just slightly necessary. I am currently 50/50 on this. We should soon know. I don't think the bears should count one out. There has been a lot of stimulation thrown at the economy. As of yet it hasn't done much, thanks to a couple of minor recessions. The stimulation is surely not going to turn this secular bear around, but a nice strong bear rally is not yet zero on the probability scale.
The reason I think a market rebound would be positive, even if moderate, is that it will set the market up for a larger fall during the next dump. The size of the fall will probably correlate to the rise in POG.
Coo Coo Ca Choo! This walrus smells something and it isn't a cow! |
