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
Pre-COVID US Economy Wasn’t All That Great Either - 4th Dec 20
Bitcoin Breath Taking Surge - Crypto Trading Event - 4th Dec 20
Platinum Begins A New Rally – Gold & Silver Will Follow - 4th Dec 20
Don't Let the Silver (and Gold) Bull Shake You Off! - 4th Dec 20
Stronger Risk Appetite Sends Gold below $1,800 - 4th Dec 20
A new “miracle compound” is set to take over the biotech market - 4th Dec 20
Eiro-group Review –The power of trading education - 4th Dec 20
Early Investors set to win big as FDA fast-tracks this ancient medicine - 3rd Dec 20
New PC System Switch On, Where's Windows 10 Licence Key? Overclockers UK OEM Review (5) - 3rd Dec 20
Poundland Budget Christmas Decorations Shopping 2020 to Beat the Corona Economic Depression - 3rd Dec 20
What is the right type of insurance for you, and how do you find it? - 3rd Dec 20
What Are the 3 Stocks That Will Benefit from Covid-19? - 3rd Dec 20
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Trades Sideways Amidst Continuing Bearish Trend

Commodities / Gold & Silver Nov 09, 2008 - 08:27 AM GMT

By: Merv_Burak

Commodities

Best Financial Markets Analysis ArticleHaving been away last week didn't seem to have made much difference. Gold is just about where it was when last I reviewed it here two weeks ago. The best that can be said is that it is building strength while moving in a basic lateral direction.

GOLD : LONG TERM - Since I last showed the long term P&F chart of gold in my 2008-10-17 commentary it had made a move to lower levels and then moved in a sideways path. It has formed a strong resistance at the $765 level so a move to $780 would be an upside break. It might also be a reversal to the bull as the down trend line is very close to that point.


It depends upon any further sideways movement prior to a break. Such a break, should it happen, would project to at least the $870 level, which would not indicate a very strong move. However, a move below the $705 level might indicate a bear trend continuation towards the present projections of $630 then $480. We'll just have to wait and see which way the wind is blowing.

As for the normal indicators, gold remains below its negative sloping moving average line and the momentum indicator remains in its negative zone just a shade below its negative sloping trigger line. The volume indicator is making new lows showing greater weakness than either the price or momentum. All in all, the long term rating remains BEARISH .

INTERMEDIATE TERM

The chart clearly shows a bearish trend of lower highs followed by lower lows. Gold is quite a distance below its negative sloping moving average line. The volume indicator (not shown) is also into new lows below its negative sloping trigger line. The momentum indicator is also in its negative zone but is just above its trigger line attempting to move higher. The trigger is still, however, pointing downward. One positive in this picture is the location of the momentum indicator. While the price and volume have both moved into new low levels recently the momentum indicator remained above its previous low giving us a mild positive divergence. We'll just have to see how this develops. In the mean time, based upon the indicators as they are, the rating must remain BEARISH .

SHORT TERM

We're getting somewhat of a mixed picture from the short and very short term indicators. Gold has basically been moving sideways for the past two weeks but the indicators are all over the place. First, gold has been above and below its short term moving average line but the line remains in a negative slope. The very short term moving average line seemed to have bottomed out and appeared to be attempting to cross the short term line to the up side. However, the attempt has so far failed and the very short term line remains just a hair below the short term line. The short term momentum indicator, however, has been moving basically in an upward direction and remains above its positive sloping trigger line.

However, it still resides inside its negative zone. The daily volume action has not been impressive at all. Over the past few months it has remained mostly below its 50 day moving average line. This indicates a volume action that is getting fewer and fewer daily trades although the trend is not that noticeable. Although the momentum indicator has made a new short term movement high this past week (but still in the negative zone) the price could not breach its previous high. Will the price pull the momentum down with it or will the momentum strength pull the price up with it? We'll see this week. For now there remains only one rating for the short term and that is the BEARISH rating.

As for the direction of least resistance, the aggressive Stochastic Oscillator (SO) is suggesting very short term weakness by already moving below its previous lows unlike the price or short term momentum. The direction of least resistance therefore appears to be to the down side.

SILVER

Since reaching its high in March silver has been a poor performer. Its latest projection is still to the $6.00 mark. This is really an average between two projections from its March to July consolidation period. One projection was to $5.50 while the other one was to $6.50, so I just took an average. Interesting to note that the projection calls for a further drop in silver price by 40% while at the same time the $480 projection for gold calls for a 35% drop in price. Close enough to consider both as equivalent projections.

There is nothing in the indicators different from that of gold. Price below negative moving average lines, momentum in the negative zone but showing a slight positive divergence and the daily activity in volume continuing to be weak and below its 50 day average volume. So, whatever the ratings were for gold could apply equally to silver. 

PRECIOUS METAL STOCKS

Over the past few commentaries I have been showing you charts of the average performances of a sector in the precious metals. Today we look in on the Merv's Qual-Silver Index for the average performance of the 10 largest silver stocks.

Over a period of just over 6 years the average price of this sector increased by a factor of over 17 times. In just ½ of a year the reversal cut that gain by three quarters. When the bear growls you'd better run, and fast. One can easily see the topping process for over a year with the momentum indicator getting weaker and weaker even as the Index was moving higher and higher. Here I show a very long term chart with a 52 week RSI and a simple 52 week moving average line. I guess the question on most speculator's minds is when will it bottom and turn around?

Well, there has been a lot of technical damage done and one would not expect a quick turn around. I would expect it to meander sideways for a while before turning around. That is not yet happening so maybe the projections for silver will cause further decline in the stocks. One should keep in mind that it would not be unusual for the stocks to actually turn around and start their bull move before the commodity actually bottoms out. It's a wait and see game. Let the charts tell you what IS HAPPENING and not try to jump the gun picking a bottom.

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.


Comments

robert clark
09 Nov 08, 17:52
buy gold

Charts are a waste of time. Comex is a waste of time.

Gold is a currency. The usd will start its massive decline any time now and gold WILL be above $900. Physical gold still remains hard to get. I bought gold coins and was told 2.5 months for delivery...thats right 2.5 months!!!

Enough said.

Robert.


Post Comment

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

6 Critical Money Making Rules