4um: Market WrapUp (08-30-05)

Title: Market WrapUp (08-30-05)
Source: Financial Sense Online
URL Source: http://www.financialsense.com/Market/wrapup.htm
Published: Aug 30, 2005
Author: Ike Iossif
Post Date: 2005-08-30 19:48:33 by Arete
Ping List: *unUsual Suspects* Subscribe to *unUsual Suspects*
Keywords: (08-30-05), Market, WrapUp
Views: 212
Comments: 27

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Today's WrapUp by Ike Iossif 08.30.2005 Mon Tue Wed Thu Fri Archive

HUI - XAU

In our previous report for the Gold Mining Stock Indices, we said:

"The index has broken above 2 resistance lines and it is getting ready to challenge the third one at 220, while both the ADX and the Aroon Indicator are on a "BUY" signal. If the pattern continues to hold, we ought to see a pullback lasting between 2-6 days, and then another push to the upside."

Let's see where we are now:

Although we had to adjust the angle of ascend to a less steep one, the original pattern and the expectations arising from it remain intact. As long as the HUI doesn't violate the 200-198 support zone, the outcome that is illustrated on the chart remains the most probable one. If the HUI closes below 198, then we will have to re-evaluate.

We must admit that we are not very thrilled with the current price action in the metal. The sideways consolidation has the appearance of a continuation flag, implying the potential for a decline to 425.

Notice that the XAU rallied up to the support line that it violated in April, and as one would have expected, it pulled back from it. Our expectation is that it will overcome the resistance imposed by the previous support line, and if our expectation turns out to be correct, then in all likelihood the rally will continue until the XAU makes contact with its upper 50 week volatility band, near the 110 level. The rationale behind such further speculation has to do with the XAU's cyclical tendency to make contact with its upper 50 week volatility band every 12-14 months. We are 10 months into the cycle, thus, within the next 2-4 months--assuming the cycle is not broken--we ought to expect another contact.

If the XAU is going to try again to take out resistance at 100.5, the most common course of action would be to use the 38.2% Fib level as the "launching pad" for the attack. Therefore, it will pull back to the 92-91 zone, and then from there, it will reverse powerfully to the upside. If the 91 level fails to contain the price, then we will have to re-evaluate at that point.

The SI25 is near the zero line, which is where one would expect this indicator to be if the XAU is going to mount another challenge to resistance in the 100.5-101 zone.

Momentum is near the zero line, which is where one would expect this indicator to be if the XAU is going to mount another challenge to resistance in the 100.5-101 zone.

The Thrust Oscillator is near the bottom of its range and it has turned up, which is what one would expect this indicator to be doing if the XAU is going to mount another challenge to resistance in the 100.5-101 zone.

The Buy/Sell Equilibrium Index is near the bottom of its range and it has turned up, which is what one would expect this indicator to be doing if the XAU is going to mount another challenge to resistance in the 100.5-101 zone.

The McClellan A-D Oscillator is near the bottom of its range which is where one would expect this indicator to be if the XAU is going to mount another challenge to resistance in the 100.5-101 zone.

The A-D Summation Index has formed a very similar pattern to the one that accompanied the rally in late July, early August of last year.

Notice that the A-D line has formed a very similar pattern to the one that facilitated the sharp advance of 2003.

The McClellan Volume Oscillator is near the bottom of its range which is where one would expect this indicator to be if the XAU is going to mount another challenge to resistance in the 100.5-101 zone.

The Volume Summation Index has formed a very similar pattern to the one that accompanied the rally in late July-early August of last year.

Notice that Cumulative Volume has formed a very similar pattern to the one that facilitated the sharp advance of 2003.

The Volume Thrust Oscillator has formed a very similar pattern to the one that facilitated the sharp advance of 2003.

Notice that the trend has turned "NEUTRAL" which is where one would expect this indicator to be if the XAU is going to mount another challenge to resistance in the 100.5-101 zone.

The only indicator that has acted "out of place" and not at all in sync with the overall technical picture painted by the rest of our "diagnostic tools" is the Hi-Low index. This indicator tells us--on a cumulative continuous basis--if at the end of the day the price closed near its high, or near its low for the day. Notice that for the past three weeks, on average, price has closed near its low for the day, although one wouldn't suspect that, looking at the cumulative price action of the XAU Index. Usually, that is not a good sign because it indicates that--on balance--investors are dumping gold stocks going into the last hour of trading. Institutional investors tend to do most of their selling during the last hour of trading, which implies that institutions are selling while individuals are buying. This indicator tends to give some pretty good warnings well in advance, so let's keep that in mind.

CONCLUSION

All the indicators have formed patterns that three out of five times turn out to have a bullish resolution. In fact, the very same patterns were observed last year between late July and early August as the HUI and the XAU embarked on a 20% rally; and they were also observed during the 2003 rally. Our expectation is that the XAU will pull back to the 92-91 zone, which represents a triple support point, and if it holds, we will see a reversal to the upside that will carry the XAU to its upper 50 week volatility band around 110-112.

If support doesn't hold and the XAU declines below 90, then we will wait to see where it finds support and then we will re-evaluate.

Currently, in our gold stock portfolios we have long positions in stocks such as ABX, NEM, BGO, AUY, and we are also long the Sep100 and Sep95 puts, which we are planning to sell when the XAU reaches 92-91 and it reverses to the upside.

Ike Iossif

Ike Iossif
President & CIO Aegean Capital Group, Inc. &
Executive Producer MarketViews.tv

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Suspend or reduce payments on houses that probably no longer exist? "Under water" on your home mortgage has new meaning. Great idea!

"With Fannie Mae's disaster relief provisions, lenders help borrowers in several ways, including suspending mortgage payments for up to three months, reducing the payments for up to 18 months, or in more severe cases, creating longer loan payback plans. Such assistance is provided on a case-by-case basis, and is designed to meet the individual needs of borrowers."

You can always count on the Saudis to pump another million barrels they don't have. Ha!

hey, two charts in less than 8 hours. A new charting record, one for the Guinnes Book.

For the umpteenth time the VooDoo Chart shows its power and mojo working. Note that the POG could not break the trend line of last resort although it spent some time below it intra day.

Gonna brew some chicken soup and send the bones to Wall Street. Gold is gonna need all the power in the curse it can get. POG did perform well enough to stay above the bottom trend line of last resort, the lime one but it's gonna need some help to get it through tomorrow. Both the RSI and the MACD are showing lower price potentials. Either take a clue from POG before opening or for the venturous quick keyboard punchers keep a close eye on spot. I'd suggest http://www.galmarley.com/Chart_pages/embed_chart_standard.htm You can get down to 10 minute intervals with less than one minute updates.

If your house is under water, wash your hands (wash wash)
If your house is under water, wash your hands (wash wash)
If your house is under water, then you're screwed and you know it
If your house is under water, wash your hands (wash wash)

If your house is under water, use your feet (run run)
If your house is under water, use your feet (run run)
If your house is under water, then you're screwed and you know it
If your house is under water, use your feet (run run)

If your house is under water, shout "Can't pay!" (can't pay!)
If your house is under water, shout "Can't pay!" (can't pay!)
If your house is under water, then you're screwed and you know it
If your house is under water, shout "Can't pay!" (can't pay!)

If your house is under water, do all three (wash wash, run run, can't pay!)
If your house is under water, do all three (wash wash, run run, can't pay!)
If your house is under water, then you're screwed and you know it
If your house is under water, do all three (wash wash, run run, can't pay!)

When prosperity comes, do not use all of it. - Confucious
The nation is prosperous on the whole, but how much prosperity is there in a hole? - Will Rogers

Maybe they could force that hot air down into the wells to get that last bit of oil out.

I wonder. Since 9/11 I've been waiting for that spark that would kick start domestic oil drilling and refining. With $70+ a barrel, $3+ gas, and scattered reports of lines forming up, you think that would kick start something at this point be it more drilling or alternative energy.

Then again, I have a very low opinion of humanity and think we might as well get used to $2.XX a gallon for gas for the rest of our lives. So long as the elite have gas for the limos nothing will change. I await the "chocolate ration" logic when prices to pull back in the "2"s for gas.

Up 2+ in spot tonight, and I bet buyers on dips like this in this environment consist of a significant percentage of people who want to hold it...

So here's the counter party to the whole shebang, the Dollar. Note that the Dollar hit its Fibo line, 88.46 and bounced downward. Now that's a sign that it may continue down or test it again. This is potentially a good sign for POG.

keep in mind that this is not a true market. The figure used is relative to other currencies and only those currencies in the basket. It is also highly manipulated by the central banks and their respective governments. Every government has a major stake in what its currency does and certainly would not leave anything to chance could they help it and they certainly are always interested in helping it to their benefit and abhor 'to their detriment'.

It's the New Economy: at a Wal-Mart on Tchoupitoulas Street, mass looting broke out after a giveaway of supplies was announced at that location. While some did indeed carry away food and essentials, others "cleared out jewelry racks and carted out computers, TVs and appliances on handtrucks

Paging Ben Bernanke: we need a helicopter drop at the Tchoupitoulas Street Wal-Mart parking lot. Maybe some of those 3000 pound bags of quarters you were going to use to plug the hole in the levee.

Chaos ensues, giving way to Wal-Mart looting this woman gets it: "Is everything free?" asked a woman who pulled up in a red car. Hearing "yes," she started to chant, "TV! TV! TV!"

But I'm not sure about this guy: Another man used a table to break into one of the last unscathed jewelry cases. Doesn't he realize that jewelry might have lasting value? Hopefully it's gold plated made in China so they can send more. In our time of need China should be filling container ships full of TV's and jewelry as we speak.

(If you see flies at the entrance to the burrow, the ground hog is probably inside)

I only heard one pundit talk about the "silver lining" hurricane. Seems that it is going to be a great economic stimulus for the 4th quarter. All we need is one natural disaster per quarter and an occasional war, and we'll all be rich!

Wow, the 10 yr bond yield is down to 4.04%. They're going to be giving cars and homes away. Free money!

My guess is an 'inflationary recession'. And they said it couldn't happen. Puplava is being proven correct.

The Dollar just punched in a confirmation of a head and multiple shoulders for the week.

"NEW YORK (Reuters) - MasterCard Inc., the world's No. 2 credit card association, on Wednesday said it plans to go public early next year, converting from an organization owned by 1,400 banks at a time when credit card stocks are soaring."

Well it went down and layed right on top of it and has been dead for several hours. Everyone musta been wonderin was it playing possum or playing dead ? Now about 3 hours later POG has decided to make the first move and it's testing its Fibo line at $434.19 and has already breeched it.

Where is everybody ? This is significant. The COMEX boyz tried their trick yesterday that up until today has worked every time. BUT, not this time. Both POG and the Dollar are doing just what I said to watch for in the wee hours of this morning.

Kent: Hordes of panicky people seem to be evacuating the town for some unknown reason. Professor, without knowing precisely what the danger is, would you say it's time for our viewers to crack each other's heads open and feast on the goo inside?

I was a day early and paid 5 cents too much for my GSS. However, that's close enough. Today, I'm in the green.

Cool. Monday I was gonna suggest that for those interested that GSS & CDE be gobbled up. They are both poised for an uptrend and if they get to their most recent highs ... it's gonna be a 3x+ bagger for both.

and I did my last move today to drastically hyperdeflate my office costs. I can now walk to work and not have to pay high rise financial district area fees. YAAAAAHOOOOOOOOOOOOOOO.

ps: also tanked up both on the F150 last night uhga uhga uhga, bungha bungha bungha. mama didn't raise no fools.