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My gunship view of the ragbag
Harry Schultz GCRU snippet
Mar 6, 2006
 The following snippet is from Harry Schultz'
current GCRU, of Mar 1, 2006. Gold Charts R Us: sent weekly
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Welcome to GCRU #199 on Mar. 1, 2006.
•• "Reuters"
reports: The Gold Bull & Gold Bear armies met
head on, with heavy casualties on both sides. When the smoke
lifted from the battle field, the Bull Army had gained
a few inches. Then they stopped for tea. There was no decisive
winner. The bullion battalion gained a bit more ground than the
shares brigade. Viewed from my helicopter gunship it looked like
a ragbag below. This was confirmed by George the giraffe who
surveyed the scene from treetop level. Webster defines ragbag
as a misc collection. The gold mkt looked very miscellaneous.
I bought a few golds & sold a couple. It was certainly not
a 1-way mkt. But one is looming, as critical breakout points
are near at hand.
Here's a technical account
of what happened, for the record, from Paul, my Aide de Camp:
"The 60-min June
futures Globex tick chart has developed some encouraging signs
of strength since last week via a rise above pivotal 558.80
neckline resistance of the Jan-Feb Head&Shoulder top, but
it requires a forceful push above 575.00 (both left & right
shoulder closing highs) to conclusively void the H&S threat.
Spinner lines are in crosscurrent bear mode with a slight easing
of negative pressure apparent in the blue confirming line. Price
lines in the sand for U & us to monitor for the next tip
on shorterm direction are either a rise above 575.00
or a dip below 552.00 (basis June).
"A new lower high in the
Schultz Gold Index (SGI) marks a loss of positive momentum;
it would take a determined break below the Nov uptrend &
intermediate support at 19.00 to produce a significant top. Unless
that is seen, several scenarios remain possible, ie a simple
dip to test the breakout point of the Feb down-wedge &/or
support of the Nov uptrend, or the start of a potential
sideways consolidation/trading range development. Spinner's
blue timing line is down-trending below zero & vulnerable
to the new downturn in the red timing line.
"Price & Spinner
action in the HUI & XAU gold indexes is weaker but similar
to action seen in the SGI. The XAU has a H&S top,
is the weakest gold share index & thus merits close monitoring;
a sustained break below support of its Nov uptrend, or its neckline,
would provide a lead signal of weakness for the general
gold shares mkt.
•• The Schultz
Gold Stks Advance/Decline Line is locked between converging
support of the Dec uptrend & resistance of a poss Jan-Feb
double top. Spinner lines are on the verge of negative
rotation below zero. It's also risen to exactly the apex of a
symmetrical/triangle of months ago, representing lots of overhead
supply in gold stocks. So, this was a logical place for a bull-bear
battle to take place."
Action in the broader gold
shares mkt remains a hodgepodge (or ragbag) & the weaker
stocks, ie, stks that have broken their Oct/Nov uptrends &/or
have formed new lower highs (AAUK, CCJ, FAL, GLG-T, G-T, MDG,
NEM, OZN, RTP & TEK-T) continue to outweigh the stronger
stocks (AEM, GAM-T, VYE-T & YRI-T). Spinner lines
reflect the above mix & are predominantly weak. A bigger
concern comes from tentative downside turns in Spinner
lines in the weekly charts that opens a risk window for
protracted consolidation activity.
Bottom Line: the gold mkt lacks clear-cut direction
with the slight negative bias in half (or more) gold shares being
offset by modest signs of strength in gold bullion. Thus investors
& trend traders are advised to stay on sidelines until
a new & decisive trend develops (be it up or
down). BUT active traders can continue to dabble/buy
those gold shares showing the best relative strength for shorterm
moves. They can also sell short gold shares with the weakest
R/S. Even if some traders are not familiar or comfortable selling
short gold shares, simply knowing when to bank profits &
move to sidelines is a strategy, & then to use recent
gains to leverage exposure via under-mkt buying - this
is fundamental to successful trading. This gold bull mkt has
several years to run & simply repeating this process over
& over again, whenever the charts so dictate, will allow
U to multiply profits many times over.
•• Fine tuning
strategy: if gold slips below the 552 June futures level,
then we should either sell our new (& old, if any left) long
positions or at least pull stops up so tight, a breeze will blow
them out, because a breakdown of bullion there would probably
take us a good size leg down, with big % losses to gold shares.
In other words U can have it both ways, provided U watch the
traffic lights & act on them. Fortunately, as I write, gold
is moving toward the upside breakout level. Yet, gold shares are weakening.
Maybe by the Tues close this will be resolved. See the PS for
a wrap-up on that.
•• By the way, buy-&-hold
is passé, but think of our way as buy-&-ride
-- until it's prudent to take profits rather than risk losing
them.
•• The currencies
are getting set to burst, IMO. The US$ is rounding over &
has suddenly fallen below a shorterm uptrend line on 60-min tick
charts, while the euro may be bottoming & all the other currencies
are up strongly on Tuesday.
•• Silver stocks
are hot, as I mentioned recently. I bought some. We're adding
a silver stk to GCRU: MAG-T. But most commodities are soggy,
& the CRB index has a H&S top, so, again, we see a ragbag
of plus zones & minus zones. But if we pick winners &
dump losers, we are ok. Same as always. We're dropping GMRK &
UPL for underperforming their sector.
See
U in the P.S. Your Uncle Harry
PS:
Tuesday was the most schizophrenic
day we've had in a long time. Gold was up all day & closed
up $ 6.90 or 1.24%. But gold shares were down all day & closed
down pretty much across the board. Our SGS Advance/Decline Line
was well down. All 3 gold indexes fell. SGI by 1.42%, HUI by
1.10% & XAU by 1.70%. XAU, as forewarned above, slipped a
touch under its H&S neckline-a scary omen, with its Spinners
plunging. Silver stocks defied their sister metals & rose.
Among the minority of gaining golds were FAL, FRG-T, G-T, LIHRY,
MDG, OZN, RNG-T, TEK-T, VYE-T, & YRI-T, proving that Relative
Strength can withstand harsh winds.
•• Silver bullion
also rose.
•• It was a day for
school boys -- to learn the necessity of seeking out (like heat-seeking
missiles) the hot stocks & trading them, while pruning the
weak stks. Ex-bellwether Newmont plunged 3.40%.
•• Quo Vadis? Where
next? Gold is in a tick chart upchannel (3 legs so far) with
a potential target of 572. But will shares hold it back? Play
it a day at a time. The individual stock chart is always the
playing field that counts most. If gold makes 572, it will be
a barrier of some size.
•• We're adding a
coal stk, Fording Canadian Coal, to the Trend Investors table
while we wait for gold shs to develop new trends. Trades NYSE
& Toronto.
•• Currencies made
strong moves Tues. The euro rose, along with Sfr, £, Yen,
A$, NZ$ with C$ to a new high. With US$ falling sharply (-.57%).
Is the US$ rally over? Too soon to say but not too soon to ask
that key question.
•• Copper bounded
off support.
•• Oil rose 1.06%
on its way to 65-this week, IMO.
•• CRB up big 3.87%,
but H&S still in place; needs rise to 356 to void it.
•• Bullish Consensus
svc: gold +2% to 83% & overbought. US$ at 53%. Sez gold outlook
for today is neutral/bullish. Intermediate term: neutral.
•• In Europe, gold
is up 1.45 so far. Looks strong.
•• So opportunity
for profits is still present, but make haste slowly, with
rules.
Good luck from your alchemist
amigo,
Uncle
Harry
2-week trial
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The following
indexes, mkts & gold stocks are reviewed this week in the
full edition of GCRU:
Agnico (NYSE & Tor)
Anglo American (Nas)
Ballarat Goldfields (Oz)
Cameco (NYSE & Tor)
Energy Metals (Tor)
First Fin'l Bancorp (Nas)
Fording Coal (NYSE & Tor)
Freeport Mcmoran (NYSE)
Fronteer Development (Tor)
Global Inds (Nas)
Gold daily (NY)
Goldcorp (NYSE, Tor)
Gulfmark (NYSE)
Lihir (Sydney & Nas)
Mag Silver (Tor) |
Mcdermott In'tl (NYSE)
Meridian (NYSE & Tor)
Natco Group (NYSE)
Newcrest Mng (Oz)
Newmont (NYSE & Tor)
Orezone Res. (AMEX & Tor)
Rio Tinto (NYSE)
SGI
SGS (A/D line)
Teck Cominco (Toronto)
TREND INVESTORS
Ultra Petroleum (AMEX)
USD (NYBOT)
Viceroy Explor. (Tor)
Yamana Gold (AMEX & Tor) |
All charts created with TradeStation
by Omega Research 2000.
###
|
 Who
is Harry Schultz?
Chevalier
Harry D. Schultz, KHC, KM, KCPR, KCSA, KCSS, is the highest paid investment consultant
in the world at US$2,400/hour-US$3,400/hour on weekends (International
Edition Guinness Book of Records 1981-2002).
To keep in
touch with developments around the globe, Harry draws from correspondents
in many countries, plus mountains of international newspapers,
magazines, and other data. At the top command posts of Harry's
elite team are Chief Market Analyst, Paul Griffiths, and Research
Editor/geopolitical analyst Gordon Frisch. Loyal HSL and GCRU
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addresses; Harry and his team consider them part of their cherished
global family.
Harry is regularly
quoted in books, articles, and interviews and by other newsletters
(the "alternative press"). Arthur Hailey, a longtime
personal friend and HSL subscriber, based his character Lewis
Dorsey in the bestseller The Moneychangers, directly on Harry
Schultz.
Harry has lived
for extended periods in 18 nations, and shorter periods in many
others. Knighted five times, Harry is a man for all seasons and
a true citizen of the world.
Contact: E-mail:
HSLmentor@racsa.co.cr
Fax: Costa Rica (506) 272-6261
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