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Strategies & Market Trends : Natural Resource Stocks

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To: isopatch who wrote (66644)	3/5/2008 7:01:02 PM
From: Little Joe	Read Replies (2) of 108758

Is this intermediate top in gold.? I have reduced all but long term gold holdings to a minimum. Here is why. 321gold.com This is the seasonal gold chart. I always pay attention to the seasonals, not because they are always right but because they are usually right. Based on the seasonals we should have topped by now and should be heading into the lows. In bull markets it is not unusual for the tops to come late. This is called right shifting and I think this is what is happening. Whether you love or hate Barrick, it is the bell weather for gold stocks. Look at this chart. I am sorry I do not have the ability to post charts or link to charts but these are the stock charts settings I use. 1 year period, landscape view. In the chart I use the defalt 50 and 200 day ma and Bollinger bands at default setting. Above the chart I use CCI 45 period Below I display, MACD – default setting and Stochastic at default setting If you display ABX in this way you will see strong negative divergence on the CCI, stochastic and macd at the last 3 highs in the 52.50 area. This can’t continue for long, though it is certainly possible that there will be one more new high before we get a serious correction. Also notice that the price is bouncing off the Bollinger band top. Narrowing of Bollinger bands indicates a trend change is near. This could be from up to sideways or from up to down. Both 50 day ma and price are far from the 200 day ma, this will likely correct soon. Also notice that the stochastic is into overbought area and has hooked down. Always ominous. Lets look at some of the other Gold stocks: GG with same settings. Here we see the same picture except for the divergences. But all of the indicators are overbought and have hooked down, with exception of the MACD. Looks worse than either of the above and has probably topped already. AEM is very strong but again all indicators are overbought and the CCI and Stochastic have hooked and are negatively divergent. Golden star is another widely followed gold stock with a similar pattern. Lastly, nearly every column I read and every other newsletter seems to be touting gold and commodities. It is time to be careful. I for one am protecting my profits. I think we have made the most of this rally and it is time to take profits and wait for lower prices. Little joe

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