Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
8 Stock Market Indicators in 1: Here's the Message of the Panic/Euphoria Model - 19th Apr 21
Gold - You Can Win a Battle, but Still Lose the War - 19th Apr 21
Will Interest Rates Rally Further Push Gold Price Down? - 19th Apr 21
Gold Fireworks Doubt the Official Inflation Story - 19th Apr 21
YuanPay Team Discuss The Process Of Crypto Diversification - 19th Apr 21
Central Banks May Ramp Up Gold Buying - 18th Apr 21
How to Get Rid of Driveway Weeds With Just WATER! 6 Months later NO Weeds, Ultimate Killer! - 18th Apr 21
State of the European Markets - DAX, FTSE, CAC, AEX, SMI, IBEX 35, S&P/MIB, Euro Stoxx 50, RTS - 18th Apr 21
Einvestment Fund: What You Need To Know About Investments - 18th Apr 21
Google Alphabet (GOOG) AI Deep Mind Stock Trend Analysis - 17th Apr 21
Stocks and Bonds Inflationary Slingshot - 17th Apr 21
Best Smartphone Selfie Stick Tripod Review by ATUMTEK Works with Samsung Galaxy and Iphone - 17th Apr 21
How to Give Budgie's First Bath | Easy Budgie Bathing and Water Training with Lettuce - 17th Apr 21
Record-breaking Decrease in New Passenger Vehicle Sale in Europe - 17th Apr 21
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Extremely Bearish Heading for New Lows

Commodities / Gold & Silver Oct 19, 2008 - 01:56 PM GMT

By: Merv_Burak

Commodities Best Financial Markets Analysis ArticleIt's been down hill all week with only Wednesday providing a minor bit of relief. It looks like we might be heading for new lows as early as this coming week. Never a dull moment.


GOLD : LONG TERM

In my many years of researching the markets I recall a wise concept. If after a significant advance the market goes sideways and can't make up its mind which way to continue, the odds are that you have reached a top and the eventual direction will be downward. The opposite is true after a significant decline. Just going sideways was not the criteria as markets often go sideways after a significant move. What the action has to do is give direction changes that go nowhere before being reversed. This is what we have here. Gold had been in a significant up trend before reaching a top and then going into a sideways trend. During the trend we had on the P&F chart a bear signal, followed by a bull signal, followed by a bear signal, followed by a bull signal and now another bear signal. This is a very unusual activity on this long term P&F chart. So, from that concept we are in for a significantly more downside move. The projections presently are to $750, then to $630 with a further projection to $480 should the down trend really continue. No concept is perfect so we'll just have to wait and see how this turns out.

From the long term stand point the indicators are not positive. Gold is below its negative sloping long term moving average line while the momentum indicator remains in its negative zone below its negative trigger line. The volume indicator is well below its negative trigger line. Long term gold can only be rated as BEARISH .

INTERMEDIATE TERM

On the intermediate term things are no better. Although gold has been tracking a somewhat lateral path for a few weeks it has now broken decisively to the down side and is once more heading lower. It is below its now negative sloping moving average line. The momentum indicator has also moved into its negative zone below its negative sloping trigger line. As for the volume indicator, well that indicator is still moving sideways (although I do not have the volume data for Friday which might push it lower) and is sitting right on top of its trigger line. The trigger itself is sloping slightly to the down side. All in all there is nothing here to grab on to and seem bullish. Gold, on the intermediate term, can only be rated as BEARISH .

SHORT TERM

Other than Wednesday it was a lousy week for gold. Gold is quickly moving away from its short term negative moving average line and the momentum indicator is moving deeper inside its negative zone. The daily volume action is low and not giving us any specific message at this time. Finally, the very short term moving average line remains below the short term line indicating that the down side prevails. The only rating one can give the short term with these indicators is a BEARISH rating.

As for the immediate direction of least resistance, well as you might expect that is to the down side. The Stochastic Oscillator has been somewhat neutral in its actions over the past few days but still inside its oversold zone deep in the negative zone.

SILVER

P&F charts are quite versatile. Depending upon the units used and the number of unit reversals required for a change in direction on the chart will depend upon the message of the chart. They all would show the same basic price direction but it is in the potential projections for the move where the differences show up. In my 19 Sept 2008 commentary I showed a P&F chart of silver based upon $0.25 units and 3 unit reversal. On that chart I showed projections to $9.00 and $7.75. The $9.00 has basically been met with the low of Friday being $9.09. Filtering out more of the daily fluctuations by going to higher unit values I get some different projections. Here I use a $0.50 units, 2 unit reversal chart. Projections I get here are to the $6.00 level and two projections to the $3.00 level. The $6.00 is actually an average of two projections, one to $5.50 and one to $6.50. It's the $3.00 one that bothers me. With the projection value reached on two different occasions one must then take this projection seriously. It looks like a long way away and does look overdone. My long term silver chart (data) goes back to 1967 and the lowest price over that time period was the $3.50 price in 1991 and 1993. This silver bull market started in late 2001 from the $4.00 level. Maybe we will just go back to the previous lows but that's something to keep in mind.

The chart shows silver as already breaking below its recent lows (which gold has not yet done) and is at the previous support from mid-2006. How long it will hold at this level is unknown but the previous support level is a very weak one. The trend is towards lower levels and I would not be surprised to see the price reach the next projection at $7.50 very soon.

PRECIOUS METAL STOCKS

Over the past few weeks I have shown a chart of the average performance of the precious metals universe (Merv's Gold & Silver 160 Index). The components of this universe include the top 100 stocks traded on the North American markets based upon market value, plus 60 others of varying quality. It is updated periodically. I had also shown a chart of the average performance of the 30 largest stocks traded on the North American markets (Merv's Qual-Gold Index). Today I show the next level of stocks, some might call them the second tier stocks. The Merv's Spec-Gold Index presents the average performance of the next 30 largest stocks traded on the North American markets after those included in the Qual-Gold Index.

Comparing the Qual-Gold Index (shown in my commentary of 03 Oct 2008 ) and the Spec-Gold Index is like comparing apples and oranges. Although the two performances look the same the actual % change in the Indices is vastly different. The Qual-Gold increased about 8 times in value from the start of the bull to its top in early 2008. The Spec-Gold, on the other hand, increased by a factor of over 42 times in the same period. One wonders why rush into “quality” when semi-quality gives you such a much greater performance? An interesting point when viewing the two Indices is that the big difference in their performances was during the early years of the bull. The past few years they both seemed to have performed about equal. Whether this phenomena will repeat during the nest bull market remains to be seen, but it is interesting. Where all this will end before the next bull is also something that is difficult to assess ahead of time, but one can quickly assess that a new bull has started by the use of appropriate technical indicators. The chart shown reflects a very long term view. Shorter term indicators would reflect a shorter term outlook but with correspondingly greater potential for whip-saws in movement.

Merv's Precious Metals Indices Table

Let's call it another week.

By Merv Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
for Merv's Precious Metals Central

For DAILY Uranium stock commentary and WEEKLY Uranium market update check out my new Technically Uranium with Merv blog at http://techuranium.blogspot.com .

During the day Merv practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv dons his other hat as a Chartered Market Technician ( CMT ) and tries to decipher what's going on in the securities markets. As an underground surveyor in the gold mines of Canada 's Northwest Territories in his youth, Merv has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv's driving focus is to KEEP IT SIMPLE .

To find out more about Merv's various Gold Indices and component stocks, please visit http://preciousmetalscentral.com . There you will find samples of the Indices and their component stocks plus other publications of interest to gold investors.

Before you invest, Always check your market timing with a Qualified Professional Market Technician

Merv Burak Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules