BURAK On GOLD
GOLD
Nudge, nudge, try as it may, gold just can't seem to get through that $430 barrier. It got close at $429.80 but this ain't horseshoes. Well maybe it will break through this week. The bugaboo still is that darn volume of trading. Low volume, i.e. lower than previous, is just not the stuff bull trends are made off. I'd like to see that daily volume (I'm talking about the volume on the COMEX futures) rise to well over that 100,000 level on up trading days, anything less than that is reason to be concerned about the longevity of any advance. Short term, we should see some kind of real action very soon.
As for the intermediate term, well gold is still a hair above my moving average line and that should improve if gold makes a break-out above $430. Price momentum is presently iffy. Usually my two or three momentum indicators are in step but right now they are not. While the Relative Strength Index (RSI) has moved gingerly into the positive zone the MACD is still negative, although heading rapidly towards the positive. During times when indicators are not confirming each other one must make educated guesses as to what is going on. I consider price momentum positive on all indicators due to their positive divergence at the recent price lows in early Feb (see the MACD in the chart). This type of divergence between momentum and price is often followed by a rally in price. Intermediate term, I am in a neutral mode waiting for final confirmation of the recent rally.
There is no change in my long term position on gold. Based primarily upon my long term point & figure chart I am still bullish, this despite the fact that the indicators remain bearish.
U.S. Dollar
The US$ has moved into its resistance zone between 83 and 84 and may be expected to remain there for a short while. At this time I see this as a short term reaction to the recent month and a half rally with the rally continuing after a brief pause. Should, however, that 83 support level be broken then a change in direction must be contemplated.
Gold Indices
Except for the AMEX Gold BUGS Index, the other major North American Gold Indices have moved above their resistance levels. The moves, however, have not been enthusiastic and require a little more confirmation. Friday's action suggests a possible back-track from the breakouts. All of our Gold & Silver Indices are showing short term positive technical ratings while on the Intermediate term they are going through a readjustment towards the positive. The long term is still predominantly negative but here too the change towards the positive can be seen to be taking place.
Merv's Gold Indices
To see what is happening to the average price of a variety of gold stocks we go to the Merv's Indices. Here we see that the gambling variety of stocks are the ones that made the biggest impression during the week. A 7.3% gain in the Merv's Gamb-Gold Index versus a 1.2% gain in the Merv's Qual-Gold Index tells the story between the moves in the average price within these opposing quality groups. While 53% of the Qual-Gold stocks are still long term bearish only 37% of the Gamb-Gold stocks are, although both groups are moving towards greater bullishness.
Looking at the three stocks reviewed two weeks ago:
Gabriel Res. (T/GBU) has moved slightly lower during the week and has not yet broken through that $2.00 resistance level mentioned in the original review. Based upon my P&F chart, a close at or above $2.10 is required for a breakout signal. Then the projection would be to the $5.00 level (well, actually $4.80 but close enough). The P&F support is at the $1.40 level.
South Malartic Exploration (V/MSU) is still in a bottoming mode and is taking a rest after a short sharp spurt a couple of weeks ago. Presently resting just above support at $0.25 and should hold. A drop below there would be discouraging.
Western Prospector (V/WNP) has performed very well since our original write-up. WNP is up 87% in only two weeks. This is the type of performance gamblers are looking for but seldom get. Although there is no evidence of a reversal in the charts one can expect at least a short reaction after such a climb. I would need to see the action during such reaction to gauge the next move.
Reading the Info table
The intermediate and long term technical information table provides the latest weighted moving average (MA), price momentum (MOM), relative strength (RS) and an overall technical rating (RATE) of each component. A + or - symbol is provided to indicate if the indicator is gaining strength or losing strength.
Mervyn Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
merv.burak@hudsonaero.com
20 February 2005
During the day Merv. practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv. dons his other hat as a Chartered Market Technician (CMT) and tries to decipher what's going on in the securities markets. As an underground surveyor in the gold mines of Canada's Northwest Territories in his youth, Merv. has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv's driving focus is to KEEP IT SIMPLE.
Although not normally available to the public, to obtain a copy of the latest weekly technical information on the component stocks of the various Merv's Gold indices, e-mail a request mentioning this Gold-Eagle offer. PLEASE provide at least your full name and home town.
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