Technically Speaking with Burak
Mervyn Burak, CMT
With such important events unfolding in the world it just seems out of place to be producing a market commentary, BUT life goes on.
GOLD
The early part of the week seemed to be okay and then along came Friday. I know it's not really true but Friday's always seem to be the contrarian of the week. Despite Friday's reaction gold still closed up three and a half bucks on the week. I don't look forward to this week's action.
All of my short term indicators are still in their negative territories with the moving average still pointing lower. A technician that doesn't know any better will therefore remain bearish on the short term, so - I'm still bearish. Now, as for the aggressive Stochastic Oscillator, is it telling me anything different? It is in deep positive territory but not quite into the overbought zone. However, it does have the initial signs of turning around, to the down side. One more day of negative or lack luster activity and it should reverse. By all accounts, if Monday is a down day, then down may continue. If Monday is an up day, then I need to look more carefully at the indicators again.
The intermediate term indicators are also all negative so here too I must remain bearish until proven otherwise. Long term is another story. The price is below a now negative moving average line but momentum is still mixed, one momentum indicator giving a negative signal while others are still positive. On the long term I will stay with my long term point and figure chart which is still positive.
Fundamentalists can juggle figures to suit their opinions of a company. Technicians can find new and sometimes strange indicators or chart patterns to suit their opinions. For what it's worth, today I show a long term chart of gold dating back to the start of this latest bull market. Fooling around with trend lines I have drawn parallel trend lines which engulf almost all of the trading action since the start of the bull. Also included is a mid-level trend line (the red one). I would have expected that half of the activity would be in the upper part of the trend and half in the lower. However, most of the trading has been in the lower half. What this means, if anything, is not yet understood. I just put it out there for others to contemplate.
U.S. Dollar Index
The US$ Index continues to act opposite to that of gold. If this keeps up it will be a real shock to many systems when this disharmony should change and both act together. The short and intermediate term indicators are all positive so I am bullish for those time periods. As for the long term, well many of the basic indicators are turning positive, which tells you the direction of the Index. However, I go with my long term point and figure chart which is still negative, so - bearish for the long term.
Gold Indices and Stocks
It's been a mixed week for the Indices with most North American Indices closing higher but a few, especially some of Merv's Indices, closing lower. The major North American Indices are having a real hard time trying to break into new highs, above their late 2003 early 2004 highs. As noted here recently, the AMEX Gold BUGS Index has all the earmarks of forming a massive top reversal pattern. It has not yet reversed but may be heading slowly in that direction.
I continue to like my Merv's Gamb-Gold Index because it illustrates the greater potential for profits in the more aggressive gambling type of stocks. Not to be ignored, however, is the greater downside these stocks will eventually produce once they turn aggressively. In the mean time this Index is still number 1 for intermediate and long term performance. Not shown in the table but this Index has now dropped to the number 3 spot in short term performance. The Johannesburg Gold Index has moved into the number 1 spot while the US$ Index has moved into the number 2 spot. Since most trends usually show up first in the short term numbers, this is something to keep watch on in case the trend continues to show gambling stock weakness. During major market tops, it is the speculative (or gambling) stocks that show weakness first.
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
4 April 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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