Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: J.T. who wrote (6244)	1/22/2001 10:01:13 PM
From: Stcgg	Read Replies (1) \| Respond to of 19219

JT - Hochberg (XAU and Gold).. Today's strong 6% rally in the [XAU] indicates that wave 'b' has bottomed and wave 'c' up is underway. This next leg higher should carry to the next resistance of 54.71-55.31. If this area is breached, the next higher resistance is 56.60-57.00, with the maximum potential capped at 58.37-61.13. Today's 51.99 high was right at the 78.6% retracement of the decline from 53.23 (Dec. 21 high), so a punch through this level would be further confirmation that wave 'c' is indeed underway. Today's 48.97 low should not be tested again, otherwise wave 'b' will likely still be in force and headed for slightly lower levels. Wavers, per our instructions of Friday night we turned bullish the gold and silver stock index (XAU) at today's 49.10 open. So far it looks like we timed this one just right. We are going to move our stop up to 49.57, which should give our bullish stance plenty of room to whether a near-term pullback. On any rally above 53.23 we will raise our stop to 50.50. [February Gold] continued its rally today, pushing up another $2.10 by the close. We now see a clear 5-3-5 upward pattern since the $263.00 low (Jan. 17). Today's $268.60 high was right in the middle of our cited resistance area and marks the 38% retracement of the decline from the December 27 high ($277.50). Moreover, today's rally halted right in the middle of a previous fourth wave. Odds are that the entire push up from the January 17 low is an (a)-(b)-(c) zigzag correction for Minute wave four. Gold should be set to fall once again, declining back beneath $263.00 in the coming week or so. This leg down would complete Minute wave five. Based strictly on the Elliott waves, this near-term scenario is the highest probable. But there are two factors (one technical, one fundamental) that may play havoc with gold's near-term price action. Friday night we discussed the solid bullish configuration of sentiment (Commitment of Traders Report), which suggests that a larger rebound may be in the cards than has been seen to date. So how will we know if gold is indeed embarking on a bigger bear market rally? The first strong clue would be a push above today's high of $268.60. Since the three-wave advance from January 17 appears complete, a push above today's high would suggest something larger is tracing out to the upside. The second strong clue would come if gold can close above $270.50, the next cluster of resistance. The other factor is fundamental. Tomorrow is the Bank of England's next gold auction, which will bring more supply into the market. The Bank plans to sell 25 metric tons of gold in the 10th auction in a series that started in 1999. Three of the auctions have coincided with a gold rally, while six so far have not. The previous auction was on November 7, which was near a low that led to a $10 rally over the following four weeks. But our analysis is based on the Wave Principle and as long as today's high remains intact ($268.60), the waves require us to be bearish and look for a decline to a new low. Above today's high and the door for a bigger bounce starts to open wide. Wavers, our stance was not elected today. We will wait and observe price action for now. >><<