- APRIL 9, 2007
Gold, HUI, XAU & GDX
Close at 20-day Highs - Considerably Higher is Possible
Technical observations of RossClark@shaw.ca
Apr 12, 2007
Both Gold and the various related
mining indices (HUI, XAU & GDX) have closed at new 20-day
highs. This satisfies the requirements for the conclusion of
the corrective phase that began following the February 26th high.
While the original break did satisfy an optimum oversold CCI(8)
reading of -152 as of March 5th it was earlier than anticipated.
In previous examples it generally took twelve trading days or
more before the selling was complete.
The two instances that correlate
well with the current 1.07 year cycle are 1993 and 2002. In those
years there was a minor break, but not enough to create an oversold
reading. Once the price broke out to a 20-day closing high it
continued higher (up of 18% & 20% in the subsequent months).
Based upon current market action a comparable move would project
to $810 +/- $10 within the next four months.
Independently, our analysis
of the symmetrical triangle breakout (measuring width, height
and commonalities with thirty years of prior triangles) points
to an interim high in the mid July to August time frame above
last year's top at $735. Any minor corrections to the 50-ay moving
average in the next few weeks should be considered buying opportunities
in the related mining stocks.
Hostage Release: The other point to be made is the
exceptional performance during the negotiation stage and release
of the hostages. Prices should have broken by $10 to $15 (in
line with the decline in crude). However, commercials used the
opportunity to reduce their net short position by 9K.
CHARTWORKS - APRIL 9, 2007
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