first majestic silver

Gold Weakening, But Not Yet Collapsing

May 22, 2016

Monday started to look good as gold seemed to rally…but in the end, nothing.  For the week gold was a bummer.  The technical indicators are still pointing to more weakness ahead but as yet the collapse has not yet been confirmed.  I like to wait for confirmation to reduce as much risk as possible without losing too much in the process.  So, what do the simple indicators tell us the final result for the week was?

Long-Term

The long-term prognosis changes slowly and this week change continues to be negligible.  All indicators are still BULLISH as far as the long term is concerned.  As for the 100 stocks in the Merv’s Gold & Silver 100 Index, they continue to be very bullish with POS/NEG ratings of 95% positive and 4% negative.  It’s interesting to note that my very long term point and figure chart has not yet made a bullish upside break, but it is usually late to the game -- and I am more interested in watching the intermediate-term for more updated information.

Intermediate-Term

It wasn’t a very good week for gold as it lost some $20 or 1.6% during the week.  Of concern is that the price did close the week just a shade below its intermediate-term moving average line although the line is still slightly sloping in an upward direction.  The price activity continues inside its “box” pattern but getting closer and closer to the lower support line and must make a decision soon, does it collapse below the support or once more bounce upwards? 

As for the momentum (or strength) of the recent activity, well that continues to work within its slightly downward sloping “box” pattern although it is still within its positive zone.  The momentum line is also below its trigger line suggesting continued momentum weakness.  Based upon these simple indicators my rating on the intermediate term has weakened to a – NEUTRAL rating.  This is my rating just above a full bearish rating.  What would put it into a bear rating would be for the price moving average to turn downward OR for the momentum indicator to drop below its neutral line, all else remaining the same.  However, there is always  hope as long as that short term moving average line remains above the intermediate term line.

Taking a quick look at my intermediate term point and figure chart, it remains bullish after its initial upside break some time back, with projections to $1350 and then to $1450.  However, as mentioned previously the chart must make its move to the $1325 level to REALLY confirm a solid intermediate term move, at which point the projections will improve significantly.

As for the performance of the 100 Merv’s stocks, this past week the performance weakened further to 75% positive and 21% negative.  Still a good bullish performance and the weakening process is also good.  It allows over enthusiastic performances to calm down, catch their breath and prepare for their next advance.

Short-Term

Nothing has changed from the short-term perspective, except things got even more negative.  The price remains below its short term moving average line and the line remains in a negative slope.  The short term momentum indicator remains below its trigger line and has once more entered its negative zone.  Of some little encouragement is the view that the momentum indicator has reached a negative point from which the price has rallied several times in the past.  However, the price didn’t really go anywhere in those cases but who knows, maybe this time it will be different.  For now the short term rating remains BEARISH.

Although I do not watch the volume action that closely (in my view it is only periodically important) anyone watching the volume action and use the Granville’s On-Balance-Volume indicator, this indicator seems to have gone negative this week after being continuously positive since early April.

 The performance of the 100 stocks has now turned negative with a POS/NEG rating of 39% positive but 51% negative.

A looming concern is my short term point and figure chart.  Here, it seems to be heading towards a downside break although not yet.  A move to the $1220 level would give us a valid downside break although $1200 would be more powerful.

Keep Your Eye On The Ball

When one reads an analysis such as this, one could very quickly get confused with all of the possibilities of bullish, bearish, positive, negative, this and that.  One must keep their eyes on the main ball.  Are we now bullish (positive) or bearish (negative) on the primary trend of concern.  That is what matters.  All the other stuff is there to keep a partial eye on and watching which way things may progress.  One would not normally act on what might be…but on what is.

Finally

Readers are invited to view my Facebook page at https://facebook.com/merv.burak where I will be slowly posting commentaries explaining in more detail my various indicators and techniques. I also present from time to time some individual stocks that look as if they may be good speculations.  I’m getting lazy in my old age so posting on the Facebook may not be as rapid as I would hope.  However, nothing I post is meant to be a recommendation to buy or sell.  One should check with their broker or investment advisor before acting.

Merv is a retired Aerospace Engineering consultant.  He is also a retired market technician with over 40 years of market experience and research.  Merv received his certification as a Chartered Market Technician (CMT) in 1992. Developer of many technical techniques and programs which he has been using in his previous Technically Speaking with Wil-Arm and Technically Precious with Merv commentaries posted throughout the globe.  Developer of several gold and silver Indices, Merv continues to update his Merv’s Gold & Silver 100 Index and Merv’s Penny Arcade 50 Index and reviews them during his periodic on-going Technically Precious commentaries. 


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