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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 06/03/2007 : 19:35:31
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Featured is the daily bar chart for silver. The main trend is clearly defined. The blue arrows point to the upside break-out, in price and in the supporting indicators. The green arrows are the likely targets for this move. The 50DMA (solid blue line), and the 200DMA (solid red line), are in positive alignment, and both are in ‘up-mode’. ‘It’s the REAL THING!’
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Featured is the index that compares the POS to the POG. One of the most reliable indicators to determine whether silver and gold are in bullish mode is to look at this index. When it is rising, the PM’s are bullish, when it is falling the PM’s are in a corrective phase. The green arrows point to an upside breakout in the index, supported by the other indicators. The index closed above the 50DMA (blue line) once again, for the first time in three months, and when this chart is updated this evening (at a reading of 0.0241), it will show a close above the 200DMA as well. That is a positive development for the metals. ‘It’s the REAL THING!’
Featured is the XAU index of mining stocks. The green arrow points to an impressive upside breakout through the red two month old resistance line. The blue arrows point to ‘upside reversals’, sometimes called ‘climaxes’. It is quite obvious, by observing past performance after one of these UR’s that odds are very good we will see at a minimum, two weeks of positive action.
The XAU index has moved back up above the 200DMA (red line on chart), while the 50DMA is in positive alignment to the 200DMA. All of this is bullish action.
Most analysts look for an ‘up-trend’ in the mining stocks before they become bullish on the metals, here is the first such signal in the past two months. ‘It’s the REAL THING!’
Summary: Whenever bullish fundamentals harmonize with positive chart patterns, the trading traffic becomes ‘one way’. In gold trading, the net commercial short position as of May 29th shows 119,000 net short positions, compared to 173,000 three weeks earlier. Such a large drawdown is a positive factor for the metals.
A note to those of you who still follow the Elliott wave guru’s. Elliott waves work best in retrospect. Somewhat like looking in a rear view mirror. One very prominent guru for the longest time kept warning us that gold was going to $250 before it would go up.
Recently another Elliott wave student is calling for gold to drop to $500/oz. With numerous metals like nickel, moly, copper, lead, zinc, uranium as well as oil and gas all in multi-year up-trends, don’t you wonder: ‘what are these guys smoking?’
DISCLAIMER:
Please do your own due diligence. I am NOT responsible for your trading decisions.
Peter Degraaf is an online stock trader with over 50 years of business experience. He sends out a weekly Email to his subscribers. For a free 60 day trial contact him at ITISWELL@COGECO.CA {A website is under construction, (p.degraaf.com), expected to be operational this summer}. Happy trading!
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Fanaticism is doubling one's efforts, yet forgetting one's purpose.
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Yes, it's the real thing!
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