Weekend update 7/02/2005
Gold
Current cycle: up
$HUI – a test of TL support today and bounced firmly resulting in an upside grenade, very bullish price action and one of the best reversals in a long time, considering bullion lost more than $8 today. We should be at the final stages of the “cup with handle”, and a breakout will see prices swiftly go to the next resistance at 230 which is a good 15% away. R/R is still excellent, as long as we exit on a TLB.
ASA – TL is redrawn using today’s grenade as support. Stay long and exit on TLB. New money can buy on the next reversal, and more on a breakout. As we are right at S, risk is 2 to 3%.
GLD – currently on TLBSS, bench.
NEM – bounced off S beautifully, buy on a close above R on a reversal, MOC.
XGD.TO – stay long until a TLB.
RYPMX – hey, those who bought yesterday is now in the black! Stay long and exit on TLB. Risk is minimal. Some members bought today, and can buy more on the $HUI breakout.
Summary
I cannot stress enough the importance of MOC. Those who were watching the intraday action on Friday must have felt dizzy with prices plunging and then bounced straight up from TL support, like a bungee cord. If you must watch during the day, be an observer, but don’t hit the buy/sell buttons until MOC. If anything, hit the “eject” button to get yourself out of there! There are many speculations of why and what happened, but we don’t really care. COT CNS this week has reached 165k, with OI at 303k, levels of previous major tops. Perhaps that is why bullion got sold off on Fri as specs were fighting for one exit door. The fact is stocks are now outperforming bullion, and that is alright with us.When we didn’t get a follow thru buying on gold stocks on Thur, prices had nowhere to go but down to test the bulls, and the bulls stood their ground. Now the ball is in the bear’s court, as we will likely test resistance. If the bulls win, we have a breakout. If the bears win, down to support again. Tug of war between buyers and sellers, in real time, real life.
Energy
current cycle: up
-cycle could turn down soon, caution is required.
OIH – it was a nice profitable trade, a break of R and we can go long again.
XEG.TO – I’m itching to take profits here, give me a TLB please.
Tech
Current cycle: turning down
QQQQ –with this week’s pivot top as resistance, we now have an R2, therefore, either we will get a TLBBS soon, or prices are declining sharply. What a genius I am! <g> One time I was watching CNBC, and this worldly stock analyst said, “if the market doesn’t go up, it will likely fall.”…….. Hello?
We did not get a favorable set up on the short side, although technically we have an hourly BRSS. Bench for now.
XIT.TO – still falling, does not bode well for the tech sector. Bench.
Bull fund – bench. Watch the QQQQ. If we get a good short set up, we’ll look at the bear fund.
Conclusion
We are at the half way point, and so far we are up about 10% overall. How do we do? $HUI was at 210 on Jan 1, now at 200, down 5%.
QQQQ was at 40, now at 37, down 7%.
OIH was at 85, now at 103, up 21%.
The average combined performance for the three sectors is +3%.
We are outperforming the market by 7%.
Here is to a better second half.
JC