Thomas
DeChastelain
Memorial Archives

Gold Sector Update
posted Mar 20, 2005 at 01:32PM

Gold Daily



For swing traders, the slanted trend-line and 430 level are the key levels to watch. For those with more IT time horizons the 200 dma is the perverbial line in the sand.

Gold Weekly



A good week would be nice to see - sufficient to force a bullish cross by the end of next week. A weaker performance will start the bears crowing about bear kisses.

HUI Daily



Looks like standard corrective price action to me.

HUI/Gold Ratio



Nothing dramatic to report here. I would not like to see the 50dma support get broken.

HUI/XAU Ratio



At critical support levels.

US Dollar Daily



By my way of looking at things MACD crosses are more meaningful when they occur at extreme levels. There is a vast territory between that where MACD crosses are of lower technical value, as they often develop into little more than whip-saw exercises.

Price action is more important and so far the dollar "bounce" looks weak and corrective.

Trading Thoughts

Last week I was of the mind that the techncals were pointing the way to some retrenchment and that basically what occured. Right now I find the picture a little murkier going forward. If pressed I would opine that the week will start slowly but should close strongly.

Again for myself I see nothing out there that says it is time to jettison inflation friendly stocks. There is some real fear starting to creep in the deflationist camp. They keep waiting for things to roll over in dramatic fashion but it never happens.

The sinking dollar is really starting to worry people, and given the horrible fundamentals, only something "systematic" can save it. I have noticed that neo-conservative apoligists have really been hammeing away at China and its banking system. Is it corrupt? Sure I will buy that, but it has been that way for millenia so no nothing new there.

The only way to save the dollar from it perilous position is to make the market believe that everyone else in in even worse shape. Trouble is - that is not true. And unlike 98, Asian countries this time have ammassed massive war chests of US assets to make sure things don't get out of control.

So far Asian indexes look OK, but they bear watching.

The bearish case for gold technically almost totally resides within the realm of Elliot Wave Analysis. "C-Wave" is the big paridigm. C waves up for the dollar and C waves down for euro and gold.

We will see. But to close, the near term trend for gold remains up. Lots of trend-line and moving average support still exists under the closing price.

Price action last week all looks corrective, so a return to these previous trends is expected. A bounce off of a moving average or support line would make a better entry for short term swing traders.

Early warning signs that something may be amiss are the 50 dma on bullion and the HUI/Gold ratio.

Good Trading

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