Thomas
DeChastelain
Memorial Archives

Ugh Oh! - Gold Getting Wobbly in the Knees
posted Mar 22, 2005 at 10:43PM

Introduction

Well I had been expecting weakness to start the week, but not with the vigour that has occured. Any thoughts of entering into trading positions have been temporarily put on the back burner, until certain criteria are met.

I still hold my buy and hold "experiments", but there isn't that much loot tied up in those and I am willing to let them sit, at least for now.

The bears are starting to sniff blood. Unless there is a remarkable turn-around, the weekly charts are going to look ugly, with bear kisses for gold and bull kisses for the USD.

Time to update the daily charts and see exactly where we stand.

HUI/Gold Ratio



The move under the 50 dma to me is a sign to stay out for now in terms of swing trades. Wait for things to get really over sold, or at least wait for some kind of movement off a support metric, (with that metric becoming your stop).

HUI/XAU Ratio



"Leverage" works both ways.

Gold Daily



Well the major support trend-line does remain in place. If it goes directly there, from here it should arrive in faily good (i.e. oversold) condition, so it should provide temporary relief.

Gold - Bigger Picture



No denying the importance of that trend-line.

HUI Daily



HUI Bigger Picture



There are many EWA interpretations available here. Unfortunately I do not know which one is right.

HUI - Another Picture



You can see why the deflationists are starting to grin.

Trading Thoughts.

Right now I still hold some golds, oils and cash, with the latter starting to look good.

Ok so if one is holding golds what should one do? Advice is cheap. All I can say to you, and to myself, is repeat a refrain that I have used in other commentaries. Use your stops, especially if you are swing trading.

Again, I believe for a retail investor the most important thing you can do is make sure your losses stay small.

Don't worry if the market turns around a day after you sell and puts itself back into bullish alignment. It's a free market and you can always get back in. We are not talking love and marriage here.

Small losses are easy to absorb in a bullish environement -one good trade will make them a distant memory. A large loss however is very difficult to recoup, and takes many good trades just to make your money back.

In the end you have to ask yourself, how much do you want to bleed for your stock?

Not to get overly gloomy. Major trend-lines do reamain in place on daily charts, and long term price patterns also remain intact. They should provide support, or if you are getting really cynical, a bounce to sell into and then reassess. The
McClellan Oscillator has also reached levels that have usually been associated with bounces.

It is very likely that the weekly charts this weekend are not going to be inspiring, particularly the MACD.

Good Trading.

Bullet Bullet Bullet