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Gold/Mining/Energy : Barrick Gold (ABX)
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To: ahhaha who wrote (1194)4/28/1999 11:59:00 PM
From: ahhaha  Read Replies (2) of 3558
 
The consolidation in ABX is distributed upwardly. That indicates high intensity of marginal demand. What is especially bullish is the aimlessness of every trade which indicates that "smart money" is looking for a favorable exit. What does aimless mean? Block orders to sell on every little spurt, but they are absorbed with only a minor downtick concession and then the round lots start coming on again. When selling in size is absorbed readily you know you have a market whose path of least resistance is up.

Why should smart money sell? They think that gold stocks are only rising because oil is rising, and they have computed that the oil run is almost over since the swing producer controls the oil price and the target is well-known. Since that is discounted this move in gold stocks will soon end and then the IMF implications on gold will pound the stocks lower.

What the swing producer doesn't know is to what extent prices will overshoot. The question is how price inelastic is gasoline? Again, how much would you be willing to pay to go on with your frivolous life? It doesn't matter since increasing oil price is deflationary. Why didn't they think of that reasoning during the '70s? Maybe then the players thought the FED would make up the difference. We know they wouldn't do that now, don't we?
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