What's "counter" in your so called "Counterpoint" ?
re: [ " A weekly close over $440 makes me very bullish "]
...that was exactly my point when I said Gold needs to take out $437, $443 and $456.
Those aren't mysterious numbers... anyone & everyone in the market see's those numbers rather clearly on the Chart for the Price of Gold....and of course, it's no different in regards to the US Dollar.
There is no point:counterpoint concerning a Higher Price of Gold, or a significant move in the USD....the entire market is on the same page on that.... you're missing the entire point here.
The HUI ramped up +40 points off of it's bottom in just 20 trading days....but now has hit a wall.
For the last 6 weeks, the HUI has traded within an incredibly tight trading range of only 11 points - which has only offered a potential tradeable spread/return of 5%.
The REWARD component of the Risk:Reward equation has just significantly changed.
...that very narrow trading band on the HUI & Goldstocks and their inability to penetrate 200 dma resistance is clearly sending us a message.
Any point:counterpoint discussion should be on just what that message is ?
In my always humble opinion; I think the message is both very clear and very simple:
- goldstocks are not moving higher to any significant degree UNTILL THE PRICE OF GOLD MOVES SIGNIFICANTLY HIGHER !
Now narrow trading bands are not a bad thing, ultimately they always get resolved by a break out of the band in one direction, or the other.
For Traders, I think it is always important to exercise a reasonable degree of patience in allowing the stocks to break out of a narrow trading band.
...for me, 6 weeks was "reasonable."
Here are the questions that Traders in goldstocks need to be asking themselves:
1. What is needed to drive Goldstocks significantly higher here ?
- no mystery here, nor any point:counterpoint. Once again, the entire market is on the same page on the bullishness of a resumption of the US Dollar Bear, a rising Price of Gold, ramping Deficit numbers, the TIC etc.
2. What could send Goldstocks lower ?
- again, no mystery here as the entire market is on the same page vis a vis the converse of the above... but, with one exception...that being - if "nothing" changes.
Gravity always comes into play at some point in time on all rally's.
If nothing changes here...Goldstocks may and probably will - retest much, if not even this entire move...and lower lows also can not be ruled out.
Nothing needs to turn particularly negative for goldstocks to rollover here...that can and probably will happen if - nothing changes.
This seems to be the Risk Component that is being ignored by those who remain buyers, or holders on goldstocks at this level... although "holding" depends on many contexts...as "holding" if you just made a re-entry trade and are sitting on significant retained profits takes on a different dimension ...than does "holding" if one held all the way down and has now recouped some of the major losses of the April/May washout and is "holding" significant losses...
Trading decisions depend on where Individual Traders holdings are on the scale of profits, or losses; total portfolio weighting/exposure etc.
In my opinion, the RISK that merely the fundamental catalysts for gold "staying the same" holds here for Goldstocks - is the main RISK component that traders are failing to factor in here.
As it takes fresh cash to move a market higher, another question that those trading Goldstocks need to ask themselves is where is that "cash" going to come from ?
Presently, we have the Dow, S&P, Russell 2000 moving higher. Healthcare & Tech are hot ...and most significantly, OIL is getting daily headlines and the stocks are at 52 Week Highs and that attracts the Natural Resource Momenteum Players, as well as their cash.
- the above is a factor that can not be ignored concerning the continuation of any move higher for the Goldstocks.
Going back to present, here & now...Traders need to ask themselves what is going to drive the Goldstocks higher right here, right now - in this present environment of GoldPrices, the USD etc ?
- Fundamentally, after a 40 point move up in the HUI Index, the HUI:GOLD valuation ratio is no where near as attractive as it was at the point of the April/May washouts in both Investor Sentiment and Shareprices ?
- Given the ramping costs that producers are experienceing, we are not seeing anything fundamentally positive in earnings growth ?
Why should anyone push the shares higher here in THIS environment ?
...and THAT imho, is the very clear and very simple message that the tape of the HUI has been telling us for the last 6 weeks !
UNTILL THE PRICE OF GOLD MOVES HIGHER - THE HUI ISN'T !
Given that this move has not yet had a retracement, or a retest....THAT is a significant RISK that should not be ignored, or discounted by anyone sitting on significant trading profits here.
The reason that so many goldbugs are still so bullish is rather simple:
Because they are NOT sitting on significant profits...
Most "traders" didn't see the bottom as the bottom and have been jumping in and out so many times that they couldn't have caught much of this move, as it all occured over just 20 trading days...and of late, given the 11 point trading range that the HUI has been in - that range has only offered a 5% speread between the lows and the highs of the entire trading range...read: Risk:Reward Metric's that are a fools game.
Reward must always be measured against Risk on a dynamic basis.
Institutions drive the HUI Stocks, not individual traders.
You have to ask yourself this question:
Untill the Price of Gold breaks out of those prior resistance levels and hits new highs... why would the stocks be pushed thru their resistance levels ?
In my thinking, given the resistance problems that we have presently and have had in the past, Institutional Managers are going to apply a decent "discount" to the HUI & Goldstocks as they move toward their prior resistance levels - in relation to where they were formerly valued in relation to the Price of Gold.
...that is another RISK factor, more accurately a "discounting" mechanism that is presently in place with Institutional Traders and this is yet another factor being missed by Individual Goldbugs.
Look at those charts of the Individual HUI Component Stocks.
Early in the rally during that +40 Point explosive move in 20 trading days... we had the prerequisite leadeship stocks emerge and blow thru their 200 dma's.
BUT ! - we never got follow thru from the middle of pack, or the laggards ... and Indices do not make higher highs... without all boats (or at least the vast majority) being lifted by a rising tide.
Look at the absolute brutal selling that is shown on those individual charts, on any and all strenth and especially at the 200 dma levels on many of the HUI stocks.
We also have the makeup of the HUI Index itself working aginst us as GFI & NEM alone make up nearly 1/3rd of the entire Index !
And for many Fund Managers, especially those that are not pure "Gold Funds", but who do want the exposure and hedge that Goldstocks offer... their mantra is this:
As NEM goes... so the golds go.
They need to play in Big Ponds... and NEM's pond is about the only one big enough for many of those non-gold speciality funds to play in.
When they see NEM unable to break thru that 200 dma...they're out.
NEM is a key indicator to watch and without NEM participating, if not even leading... we do NOT get that significant push from non-gold speciality Institutional Fund Managers.
NEM MUST LEAD, or at the least - strongly participate... for any HUI rally to continue.
And that "aint" happening here...
I'm getting PM's calling me a "traitor"...saying I'm "now a BEAR" on the golds etc.
Wrong.
I am VERY BULLISH longterm on both the Price of Gold and Goldstocks.
Traders must always respect the past... the past being market history, as well as always keeping one eye focused on the future and the other in the "now".
The eye focused on the future is the happy eye.. the bullish eye, but the one focused on the "now" - is the one with the finger on the trigger and it hasn't been so happy with what it see's on those charts, nor with what history has shown us nearly always occurs... the law of gravity.
...and that gravitational pull on goldstocks in the environement that we now find ourselves within - where "nothing" is happening - was a primary catalyst for me ringing the cash register here.
Gravity, respect it... or become a victim of it.
WE NEED THE PRICE OF GOLD TO BREAK THRU PRIOR RESISTANCE - GOLD MUST LEAD THE STOCKS HIGHER !
Slider`
PS: you don't want to even know what the "3rd Eye" is seeing (vbg)... |
