................Not A Gold Breakout/Buy Signal
Gold broke out of it's triangle formation since 11-7-07's likely Wave 1 Cyclical Bull market cycle high at $848 today (see gold ETF GLD at http://stockcharts.com/charts/gallery.html?gld), and, it appears to be a bullish breakout. Wrong! GLD needs to follow through by at least 2% (would have to at least approach 83), see http://finance.yahoo.com/q/ta?s=gld&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c.
Also, one wants to see at least two hours of follow through timewise. A spike at the open followed by weakness can't be a buy signal. If a breakout/buy signal occurs there should be significant follow through pricewise and timewise.
I imagine that Jack Chan, one of the few gold writers I respect as far as market timing goes (though he doesn't understand cycles/Elliott Wave/gaps from what I've seen, he has a disciplined conscientious approach), will consider today a buy signal, see http://www.321gold.com/editorials/chan/chan122407.html. Jack's approach could be on a buy signal during a very risky countertrend Wave B upcycle. One might be aggressively long and get caught in a vicious Wave C decline while waiting for a sell signal. In other words, one might buy a downtrend (might catch a falling knife) using Jack's approach.
Even if gold did hit a 2% follow through buy signal I'd probably ignore it. Gold might put in a double top with 11-7-07's likely Wave 1 Cyclical Bull Market cycle high at $848, or, might even put in a modestly higher cycle high, since gold tends to lag HUI/XAU at important cycle highs (bottomed in April 2001, about six months after HUI/XAU, and, an important cycle high occurred in April 2004, 3-4 months after HUI/XAU), but, it's too risky to trade gold aggressively long now.
Given the Euro gold's long term bearish double top (May 2006/November 2007, see chart 3 at http://www.the-privateer.com/chart/g-multi.html), and, the fact that the US Dollar probably entered a Cyclical Bull Market in November 2007 after being in a Bear Market since late 2005 (think any of the gold writers will point that fact out?), see http://stockcharts.com/charts/gallery.html?%24usd, plus the very bearish NEM/WMT Lead Indicators recently (see NEM Lead Indicator 5 day chart http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem), and it's far too risky to trade gold aggressively or even modestly long now.
I'm waiting for NDX (NASDAQ 100)/HUI/XAU/gold's short term upcycle since 12-18 to clearly break down, then I'll look to aggressively short an intraday/very short term countertrend Wave B rebound/upcycle (buy QID, the Ultra Short NDX ETF, and, short the GDX (Gold Miners) or GLD (gold) ETF).
Merry Christmas/Happy Holidays all.
....... http://www.JoeFRocks.com/ .
Also, one wants to see at least two hours of follow through timewise. A spike at the open followed by weakness can't be a buy signal. If a breakout/buy signal occurs there should be significant follow through pricewise and timewise.
I imagine that Jack Chan, one of the few gold writers I respect as far as market timing goes (though he doesn't understand cycles/Elliott Wave/gaps from what I've seen, he has a disciplined conscientious approach), will consider today a buy signal, see http://www.321gold.com/editorials/chan/chan122407.html. Jack's approach could be on a buy signal during a very risky countertrend Wave B upcycle. One might be aggressively long and get caught in a vicious Wave C decline while waiting for a sell signal. In other words, one might buy a downtrend (might catch a falling knife) using Jack's approach.
Even if gold did hit a 2% follow through buy signal I'd probably ignore it. Gold might put in a double top with 11-7-07's likely Wave 1 Cyclical Bull Market cycle high at $848, or, might even put in a modestly higher cycle high, since gold tends to lag HUI/XAU at important cycle highs (bottomed in April 2001, about six months after HUI/XAU, and, an important cycle high occurred in April 2004, 3-4 months after HUI/XAU), but, it's too risky to trade gold aggressively long now.
Given the Euro gold's long term bearish double top (May 2006/November 2007, see chart 3 at http://www.the-privateer.com/chart/g-multi.html), and, the fact that the US Dollar probably entered a Cyclical Bull Market in November 2007 after being in a Bear Market since late 2005 (think any of the gold writers will point that fact out?), see http://stockcharts.com/charts/gallery.html?%24usd, plus the very bearish NEM/WMT Lead Indicators recently (see NEM Lead Indicator 5 day chart http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem), and it's far too risky to trade gold aggressively or even modestly long now.
I'm waiting for NDX (NASDAQ 100)/HUI/XAU/gold's short term upcycle since 12-18 to clearly break down, then I'll look to aggressively short an intraday/very short term countertrend Wave B rebound/upcycle (buy QID, the Ultra Short NDX ETF, and, short the GDX (Gold Miners) or GLD (gold) ETF).
Merry Christmas/Happy Holidays all.
....... http://www.JoeFRocks.com/ .
Labels: Gold
posted by Joe Ferrazzano at
7:44 AM
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