XAU Trend - Long-Term
"In 1581, Galileo, while attending services at the Cathedral of Pisa,
observed a chandelier swinging back and forth.
Energized by shifting air currents, the chandelier moved in a variety of arcs
and amplitudes. Thus was born the concept of the pendulum
which Galileo used as a time measurement device in his later experiments"
Introduction
Since the XAU emerged from its low in November 2000, near 41, it has now arrived at the 194 level. That performance is 4.7 times the turning point and an average gain of about 21 points per year.
This is a major trend and worthy of examination as to whether this primary trend is continuing and its prospects.
Past History
One way is to review the XAU's progress is on a monthly basis. Our proprietary monthly blue TDI (Trend Directional Indicator) crossed its red LTC (Long Term Trend/Cycle) signal line in January 2002 as demonstrated on the next two sequential charts.
Trend Directional Indicator & LTC Signal Line
Current Monthly Update (to January 2008)
Clearly the long term uptrend is intact and the slope and degree of the indicators is not severe.
The monthly TDI/LTC indicator has not signaled a down trend change in seven years so the bull market continues. In fact, it has been error free for fourteen years in both bull and bear markets, therefore, from our perspective, it is wise to stick with those probabilities. Please see the complete TDI/LTC record from 1994 here.
Cautionary notes on using the monthly chart
- Except when the XAU price hits the red LTC line, such as in August 2007, it is not a great timing indicator on a monthly basis.
- The TDI/LTC indicator is far below the monthly price. Unless there is price acceleration shortly, a sideways market may be indicated on a monthly basis for the intermediate term.
Daily Version of the TDI/LTC
The daily version of the TDI/LTC chart also confirms the current powerful up trend. Here again, the TDI/LTC indicator is far below the daily price so caution is clearly indicated.
Strategy
For the purpose of viewing a primary longer term trend, the TDI/LTC trend indicator has no equal. This is a long cycle indicator which allows one to stay focused on this powerful profit opportunity and its progress.
Our goal is to add to premiere long term positions in any personal or model portfolio when low risk entry points occur as defined by our leading XAU indicators such as the TDI/LTC methodology.
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