Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: patron_anejo_por_favor who wrote (21957)	1/21/2005 9:38:22 PM
From: mishedlo	Read Replies (1) of 116555

Thoughts On Gold Mish: is this an oversold bounce in gold or the real thing? Heinz: i treat it as a bounce for now. whether it becomes more remains to be seen. but as i've noted previously, money flows into gold shares have looked rather bullish for quite some time. so i expect this will be a significant, playable bounce. it's to be expected though that it will be quite erratic and volatile, since there's so much fear/doubt in the market. the gold timers are more bearish than at the '97 lows 7 years ago. Mish: How do you see money flow being positive? I sent you some charts of chadkin MF on NEM and GG and a few others I think. It looked like it sucked to me. Heinz: i don't use formulaic money flow charts - they're imo useless, except when they show grave divergences. all these formulas do is measure volume and price movement - iow, they're not materially different from other overbought/oversold oscillators (actually, lows usually occur when formulas like the chaikin show extreme negativity, and vice versa). what i do can not be expressed in a formula - i watch the tape, and gauge the buying and selling of big traders vs. the buying and selling of small traders. i use between 10 to 15 stocks in this exercise, and it's quite an involved process actually. i also watch things like spoof offers and bids (i.e. large offers and bids that don't result in trades, but are only designed to suggest demand or supply that doesn't exist) and i watch both the open and especially the last half hour of trading very closely. from experience i know that this is more reliable in gauging future direction than any form of t/a i've come across. of course it doesn't hurt to know that the XAU put/call OI ratio is at 100, or that the timers are net short the sector. but the money flow picture is for me the most decisive bit of information. i got the idea from a 1910 book on tape reading by Richard Wykoff. i'm simply applying the principles to modern day computer based trading.

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