Thomas
DeChastelain
Memorial Archives

Bullion Charts & Commentary
posted Dec 10, 2005 at 03:44AM

Gold Daily


(The red circle on the MACD should be green)

The RSI has been circled red as this level of overbought usually has short term bearish implications. On a bigger picture this level of overbought can be interpreted as a confirmation of bullion's bull market.

Gold Weekly



Again, from a contrarian point of view, a difficult chart to buy.

HUI Daily



Stocks continue to trend upward as a sector if sluggishly. The new print highs is bullish but can be negated by a move under 250.

HUI Weekly



What happen's next? I for one do not know. I think gold equity reaction to the next Fed interest rate announcement will be telling

Some Extracurricular Fun with Trend-Lines

HUI/Gold Ratios



Here the resistance trend-line along peaks was made. Then a parralell line for the support channel. We are still in the realm of throw-over, where near term direction really has bullish or bearish implications. But as of now this chart does reside on the bullish side




Here the support trend line was drawn first and then a parralell line drawn starting from the peak. My point? None really but to show how easy it can be to fiddle with trend-lines to spin a bearish or bullish spin. And of course the aim of TA is to act as an objective tool for making trading decisions

HUI Long Term Charts




Again from Adam Hamilton who suggested in his last essay that too many people are concentrating on horizontal resistance whereas this price channel may be the governing structure.



Other trend-lines that may be in place

Discussion/Trading Strategy.

Well as I write it seems that every commidity on earth is at "multi-decade highs" and are all at extreme overbought conditions. Most equity indexes are similar in the that they have all had uptrends, are all at or just past major resistance levels, and all have a number of bearish divergences that wave red flags but don't amount to anything. There are no signs of price reversals anywhere.

Nobody wants to sell...anything. I look at my portfolio. and a good chunk of it is in overbought. And yet I have no real motivation to sell. I like the stocks, (uranium, oil sands, oil and nat gas) I like their futures. Part of me just doesn't want to pay any capital gains..for this fiscal year anyways. Checking the portfolio balances has been a most satifying affair. I feel good...I want to let them run.

Ergo I am nervous. Even as I troll for some golds that I think I are going to pop (these rallies have been ALL about being in the right stocks) I wonder if the worm is going to turn.

Everything is up, except maybe the Housing Index...which more and more is looking to be mortally wounded. If things are so great why is the CHN (China Index Fund) languishing? Does nobody notice the near inverted yield curve? The plummeting Baltic Indexs are other divergences that perhaps things are not as good as advertised. Why does the dollar refuse to sink like a rock?

Then there is that thing with the M3 not being published. The whole market has assumed that this means loads of liquidity from "Helicopter Ben" will be coming in to keep the boats rising. Now I agree that not publising the M3 means they want to hide something, but since when has the FED ever been embarrased about artificially re-inflating asset values? The minute anything goes wrong in the world, the market expects, nay demands that the Fed turn the taps on, and the M3 is the way the Fed can show that all is well...medicine is on the way.

So I am thinking maybe the reason Ben doesn't want M3 to be published is because he does want to hide something from the markets...something the markets will not like at all. Maybe he won't turn the taps on...maybe he is going to turn the taps off! Maybe he doesn't want to be chief caretaker and bagholder for Greenspan's legacy: maybe Ben has read his Machievelli, which states that a wise ruler should "commit all cruelties at once"; maybe Ben wants to pop every asset bubble he can, as quickly as he can, while he can still blame it on Greenspan. Then, when the dust settles, he can start up his own ponzi scheme, but starting from much better initial conditions.

Like I said..I am feeling good...but I am nervous.

As far as gold goes I have no real solid thoughts. With all the mindless power bumbling about at the head of the US bus, I really would like to have some pure gold exposure, and reinvest some, if not all the profits, taken from entry points in May June. But let's face it, this is, from a sector point of view, hardly an optimum buy situation. Are there enough like me who sold at resistance and are now ready to jump back in? What about those who have not participated in this gold rally at all to this date? Is the herd actually going to start piling into the stragglers and explorers I am eying?

I do not know.

There is analysis and attempts to foretell the future direction of the markets - and then there is trading. Your trading plan has to include for contingencies that things will not go your way.

Good trading

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