Saturday, December 22, 2007

From Bearish to Neutral

Gold stocks started the week continuing last week's bearish momentum, but that momentum was lost toward the end of the week. Both Canadian and American gold stocks are retesting the breakdown point that occurred on Monday. This chart, showing Canadian Gold stocks, shows what I mean:


The above chart is a daily chart of an ETF that does twice the performance of the Canadian Gold Stocks Index, and the ticker symbol is HGU.to. As you can see, there was a quadruple bottom breakdown that occurred on Monday, which seemed to me to be quite bearish at the time. Although gold stock rebounded sharply on Friday, this gap area is going to be resistance, in my opinion.

The next chart is a daily chart of GLD. Obviously, there is a triangle forming, and many analysts see this as a bullish development, and that is a definite possibility. My advice for trading this is do not jump the gun on this formation. Gold and gold stocks are notorious for failed breakouts.


My options expired yesterday, so I probably won't be looking at the charts all that much next week, and I am sure most people have better things to do at this time of year than to technically analyze gold stocks! Hope everyone has a good Christmas.

4 comments:

Got A Watch said...

Thanks for your hard work on this Blog. Appreciate the insights, tho I can't say I always agree with you.

I read regularly, as one of my weekly must-read precious metals sites.

Have a Merry Christmas and A Happy New Year! Best Wishes to You and Yours!

Anonymous said...

Hello Danny!

I'll bet ya a half million that your fat green line on your HGU chart will be crossed up and through like a hot knife through butter, and soon!

Maybe a little "head fake" for a day or two for the technicians who forget this is -gold- we are talking about here.

I hope you had a nice Christmas, I emailed you about a week ago.

All the Best,
RedGoldCU

troy said...

HGU what the diff vs xgd ?

Danny Merkel said...

Thanks for the comments guys. Hope you had a pleasant holiday as well.

Steve, looks like you were right in a big way. HGU.to exploded higher shortly after your comment.

Troy, the difference between the two is that HGU does twice the daily performance of XGD.

I will write another post on January 13th.