The cold, unemotional boxes
... And there's nothing more cold and unemotional than a point&figure chart. Let's start with "black gold," better known as OIL. Each box on this chart = one point. We see that oil is holding above its most recent ascending trendline. As of Friday, oil rose to the 62 box. An upside breakout would require oil to rise to 63. A downside breakout would be signaled if oil declined to 55.
The upside "count" for oil (always assuming no reversal) is 83. Oil could back off to 57 and remain bullish. Oil could run back and forth between 62 and 57 and remain bullish.
My own guess is that because of the hesitation in the oil stocks, we might get some backing-and-filling here, but I also think the next important move will be an upside breakout for oil at 63.
The next chart will deal with the only true money -- gold. Each box on this chart = 4 points. It looks to me as though gold is building a powerful base here. In June a row of Xs bettered the preceding row of Xs, and at that point gold turned bullish again. The upside "count" on this bullish signal is 492. During July gold produced a corrective line of 0s, taking gold back to the 420 box.
Most recently in August, gold has put in a new rising row of Xs. To turn bearish, gold would have to drop to the 412 box. An upside breakout would require gold to hit the 444 box. An even more powerful upside breakout would come if gold could hit the 448 box.
We await the verdict of the marketplace. But gold is looking very bullish.
I was surprised at the very minimal rise in the VIX on Friday, considering it was such a poor day for the stock market. There's just a lot of complacency out there. You have to wonder what it would take to scare market participants? Of course, the answer is always -- sharply lower prices, either that or an extended decline.
Historically, August tends to be a dull month. But this August may be different.
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