RUSSELL BULLISH ON GOLD & HUI
Now I want to show a weekly chart of gold. The daily charts are important, but the weekly charts are more important, because it takes more action and more consistent action to turn a weekly chart bullish or bearish.
It appears that gold has gone through another "gut check," which is a powerful reaction calculated to separate all but the most dedicated from their positions. The chart below goes back to 2002. Note that MACD (heavy black line) at the bottom of the chart has sunk deeply into oversold territory, even further down than the similar correction of March-May 2003. But what's really important here is that the weekly histograms (blue bars) are starting to contract towards zero. Once this process starts, the odds are high that the histogram contraction will continue until MACD crosses above its shorter moving average (think black line) at which time the histograms will turn positive and above zero.
All of which makes me believe that the gold correction has come to an end, and that the direction of gold and gold shares will now be to higher levels.
I mentioned earlier in the week the on the P&F chart, when HUI touched the 190 box that was a signal that HUI had turned bullish. As I write this morning, HUI is trading at 191.09 and all 20 of the gold and silver stocks that make up my gold advance-decline line are higher.
(NOTE: HUI has effected a bullish Double Top Breakout)
May 22, 2004
Richard Russell
Editor-in-chief - DOW THEORY LETTERS
www.dowtheoryletters.com/dtlol.nsf
The inimitable and venerable Mr. Russell gained wide recognition via a series of over 30 Dow Theory and technical articles that he wrote for Barron's during the late-'50s through the '90s. Through Barron's and via word of mouth, he gained a wide following. Russell was the first (in 1960) to recommend gold stocks. He called the top of the 1949-'66 bull market. And almost to the day he called the bottom of the great 1972-'74 bear market, and the beginning of the great bull market which started in December 1974.
Email this Article to a Friend 
Printer Friendly Version
