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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: westpacific who wrote (57378)	4/26/2002 4:26:08 PM
From: Softechie	Respond to of 99280

I should have listened to you on GOLD...damn! Is it too late now?

To: westpacific who wrote (57378)	4/26/2002 5:09:23 PM
From: Bandit19	Respond to of 99280

westpacific, Here are John Murphy's latest thoughts on gold....(charts won't copy) GOLD HITS TWO-YEAR HIGH... Gold prices bottomed just over a year ago near $260 -- and have been rising pretty steadily since then. This week, gold prices touched the highest level in two years. The first chart shows that the next upside target is in the $320-325 zone. The monthly chart puts the gold action into better perspective. First of all, it shows that the low of last year was actually a retest of the previous low formed during 1999 -- setting up a potential "double bottom" reversal pattern. It also shows the next upside resistance barrier near $325 formed by the late-1999 peak. That looks like the next upside target. To actually "complete" a major bullish breakout, however, gold would have to exceed the $325 level. In other words, the major bull market in gold could be just starting -- and may have a long ways to go. There are usually two ingredients that support a rising gold price -- falling stock prices and a weak dollar. We all know stocks have been dropping. How about the dollar? DOLLAR DROPPING FAST... The first chart shows the dollar falling under its 200-day moving average this week -- and dropping to the lowest level this year. That's certainly helping gold prices. The second chart is even more ominous for the dollar. Depending on how we read it, the weekly chart could either be a potential "head and shoulders" top (with 3 peaks) or a "double top" which would include only the last two peaks. In either case, it's potentially bearish. We've drawn a rising trendline under the lows of the past year (which sits near 114). A decisive break of that line would, in our opinion, be even more bearish for the dollar -- and even more bullish for gold -- since they usually trend in opposite directions. GOLD STOCKS LEAD BULLION... Another factor supporting higher bullion prices is the rising Gold (XAU) Index. That's because gold stocks have a history of turning up before gold. The first chart shows the XAU Index breaking through its highs of last April earlier this year to initiate a new uptrend. The XAU is now trading at the highest level in more than two years. The green relative strength line along the bottom shows that gold stocks have been outperforming the S&P 500 for the last year and a half. Some may be wondering if it's too late to commit some funds to the gold sector. We don't think so. Chart 6 shows why. The Gold Index is in the very early stages of an apparent new uptrend. The six-year bear market (red) trendline was broken this January. The XAU has to climb 25% just to reach its next upside target near 95. We think there's a strong chance that next target will be reached -- and eventually exceeded. We've said it before -- and we'll say it again. We believe everyone should own some gold stocks -- either individually or through a gold mutual fund. GOLD STOCKS AS A STOCK MARKET HEDGE... One of the hallmarks of gold (and gold stocks) is their tendency to move inversely to stocks. Gold has been in a twenty year bear market. At the same time, stocks have been in a twenty year bull market. If stocks have completed an important top that won't be reached or exceeded for several years (which we believe is the case), the bullish argument for gold (and gold stocks) gets even stronger. And since gold shares rise faster than the price of bullion (which they've been doing), gold shares are a better way to play a gold rally than bullion itself. The last two charts show the Gold Index and the S&P 500 trending in opposite directions for several years. The XAU Index broke its bear market trendline around the same time the S&P 500 broke its bull market trendline -- that is, at the start of 2001. At the moment, the XAU is trading over its rising 40-week moving average, which is our definition of a bull market. The S&P 500 is trading under its falling 40-week average, which is our definition of a bear market. We prefer the bull market in gold shares to the bear market in stocks.