Technically Precious With Merv
For week ending 9 December 2011Gold continues to show lack of enthusiasm from speculators. Volume low, price going nowhere except slightly lower, not bullish for the road forward but things could change overnight.
The long term chart shown here a couple of weeks ago remains in force. The action remains within that up trending channel and that very long term momentum indicator remains below its support trend line but still in its positive zone.
Trend: The basic long term trend is still positive although the price of gold is moving towards its long term moving average line and the two could merge sometimes ahead. For today the Friday close gives us gold still above its positive sloping moving average line.
Strength: The long term momentum indicator continues to move in a lateral direction but with a slight negative bias. It remains in its positive zone but is slightly below its negative sloping trigger line.
Volume: The volume indicator is also moving in a lateral direction but is also slightly below its negative long term trigger line.
At the Friday close the long term rating remains BULLISH but with some weakness coming into play.
Today's chart (in the short term section) shows a wedge pattern that suggests a break on the up side as it is at the end of a long up trend. This pattern is often at a mid-way of a trend but I wouldn't place any money on it. As I see it other indicators might suggest that the break could just as easily be to the down side. This is one reason I am primarily a trend FOLLOWER rather than a trend PREDICTOR. Go with the flow and change when the flow changes.
Trend: Gold closed on Friday just very slightly below its intermediate term moving average line but that was enough to turn the line slope oh so slightly to the down side.
Strength: The intermediate term momentum indicator remains slightly in the positive zone but already below a now negatively sloping trigger line.
Volume: The volume indicator closed the week very slightly below its negative sloping trigger line.
At the Friday close the intermediate term rating is now considered as BEARISH. The short term moving average line remains just above the intermediate term line and not yet confirming this bear.
For the past several months gold just hasn't had any real conviction which way to go. Such hesitation, some may call it consolidation, is not usually encouraging after a long bull move. It is too often the consolidation towards the start of a bear market, but I'm getting ahead of the actual long term trend. Let's see where we are from the short term perspective.
Trend: Gold has once more dropped below its short term moving average line and the line is in a negative slope.
Strength: The short term momentum indicator has once more dropped into its negative zone taking the negative trigger line with it.
Volume: The daily volume action remains very low. This lack of speculator participation does not suggest strength but also it does not necessarily suggest weakness. We'll just have to wait and see how it develops.
On the short term, at the Friday close, the rating is BEARISH. The very short term moving average line is moving lower fast but closed the week just sitting on top of the short term moving average line and not quite confirming this bear.
As for the immediate direction of least resistance, I'm going once more with the down side. The Stochastic Oscillator is heading in that direction and has not quite entered its oversold zone yet. The very short term moving average line is in a steep negative slope. Only global politics, war, peace, etc. could seriously affect the very short term trend.
Although silver did not drop as much as gold (% wise) it remains a weaker performer than gold. Maybe this is the start of silver recovering its previously held superiority to gold performance but so far that is not yet the case.
Trend: Unlike gold's positive long term trend silver continues to trade below its negatively sloping long term moving average line. It is still above its long term point and figure support but very close to breaking on the down side.
Strength: The long term momentum indicator continues to move hugging that neutral line. It is also hugging its trigger line.
Volume: The volume indicator is moving lower and just about to break below its late Sept lows. It remains below its negative sloping trigger line.
At the Friday close the long term rating remains BEARISH.
Trend: Silver continues to trade below its negative sloping moving average line.
Strength: The intermediate term momentum indicator seems to want to strengthen and is just below its neutral line, but still below. It is hugging its trigger line and it's difficult to say one way or the other if the trigger is positive or negative, let's just call it horizontal.
Volume: The volume indicator continues to move lower below its negative trigger line.
On the intermediate term the rating can only be BEARISH. This bear is confirmed by the short term moving average line remaining below the intermediate term line.
Trend: Friday's upside move took silver to just about its short term moving average line but it ended the day just below the line. The moving average line itself is still in a very slight upward slope.
Strength: The short term momentum indicator continues to track just below its neutral line but did close the week just above its negative sloping trigger line.
Volume: The volume action is still pretty low. Friday's price advance was on lower volume than Thursday's price drop. Not usually a good sign.
Putting it all together the rating at the Friday close is not quite bearish but a - NEUTRAL rating, one step short of a bear. The very short term moving average line is suggesting the same by being in a sharp downward slope but just shy of dropping below the short term moving average.
As for the immediate direction of least resistance, one might go for the lateral direction here but with the gold perceived as going lower I'll go with the down side for silver also.
Merv's Non-Edibles Futures Indices Table
Well, that's it for this week. Comments are always welcome and should be addressed to email@example.com.
Merv Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
Mervís Precious Metals Central
19 November 2011
For DAILY Uranium stock commentary and WEEKLY Uranium market update check out my new Technically Uranium with Merv blog at http://techuranium.blogspot.com.
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 whatís going on in the securities markets. As an underground surveyor in the gold mines of Canadaís 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 Mervís driving focus is to KEEP IT SIMPLE.
To find out more about Mervís various Gold Indices and component stocks, please visit http://preciousmetalscentral.com. There you will find samples of the Indices and their component stocks plus other publications of interest to gold investors.
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