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Gold/Mining/Energy : Gold Price Monitor

GDXJ 121.59

+2.2%

Dec 26 4:00 PM EST

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To: cool who wrote (22403)	10/29/1998 8:57:00 AM
From: Giraffe	Read Replies (1) of 116832

From Precise Buy Signals: Wednesday October 28, 1998 Buy Gold! It would seem that a strong one-day gain would be a sure sign of renewed buying interest & opportunity - in any market, particularly after several days of heavy selling. Quite often these one-day surges in price are "short-covering" (or "profit-taking" in the case of selling) - investors unwinding their short (or long) position. Each bar on this chart is the sum of price change for the two days following the last eight one-day gains of 3% or more in gold stocks. The average experience following a price spike is a 3% loss. Predictably, gold stocks gave back 3.3% intra-day today and have since rebounded impressively despite subdued gold action. Cycle work says a gold bottom is not due until mid-next week but the ability of gold stocks to erase a 3% loss the day after an 8% gain (without gold support) is indication of true buying interest (as opposed to short covering). If cycles are correct, this recommendation to buy gold stocks may be a bit premature but after the last sell signal, gold stocks dropped 22%. That decline should have wrung out excesses as it has revived a favorable technical picture for these stocks, including support at the 50-day moving average. Other work says this time period will be a MAJOR low in the price of gold and gold stocks.

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