I decided to take what I hope will be a low risk mining position with this purchase of Great Basin Gold (GBG) at $2.12. Honestly, I am not holding my breath on how long this rally in miners will last, but I presume the stock market will bounce soon and that may help, however briefly.
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Click on any chart to ENLARGE
This chart of the SP-500 was made before the end of today's trading session.....and price continued to fall right through the neck line of the head and shoulders pattern. If this pattern continues to play out, price projects to a continued minimum price decline 110 points or the 1150 area.
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This chart of the Amex Gold Bugs Index (HUI) shows the nearly perfect symmetry of a head and shoulders pattern. If price should continue to rally this week and surpass 587, the symmetry would be perfect.
Today gold managed to reach that $1665 price I referred to in Saturday's post. Well, it was 50 cents short of $1665, but that is close enough. Anyway, gold is now 15% above its 200 dma and my expectation is that its daily cycle correction phase should now begin. See Saturday's chart for details.
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My TSI trading record has been updated.
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John,
ReplyDeleteI am in agreement with you that gold should start down Now. I've been waiting for it to hit 1650 and buy the DZZ. I hope nothing much changes in overseas market before morning here.
I think GBG is a good play. I almost bought some when I saw the reverse head and shoulders. But the pattern fizzled and now we have another chance. Maybe it can make 2.50.
About a year ago, the SP formed a head and shoulders top and started to break thru the neckline.... but, it pulled out of it and took off higher. Is there anything different in the latest HS pattern and the one a year ago? Anything to give a clue if the neckline will break or not?
Hi, John,
ReplyDeleteI would like to paraphrase your current post. Kindly correct me if I am wrong. The way I understand it, it seems to suggest that the miners could face a minor rally along with the market (hence painting a perfectly symmetrical H&S), then possibly dropping along with gold price? If so, it seems like selling the miners when the HUI is ~ 587 would be just nice?
Anon - yes, you understand exactly what I am thinking. But what I think and what actually happens are usually two different things, unfortunately.
ReplyDelete*If* the big deflation event ala 2008 takes place, my thinking should be fairly accurate.
But we both know the FED will do everything but sell its mother to prevent that from happening.
IMO, the markets now are so manipulated that it really is tough to figure out which shoe will drop next. At least, for me it is tough.
Heck, even many big hedge funds depend on front running the FED (due to the manipulation) to earn their fees, so no shame in getting it wrong.
ReplyDeleteAt the end of the day, still need to stack silver or gold coins as some form of SAVINGS against global currency depreciation. God bless your free blog. Pretty interesting stuff.
John, I find it interesting that after GBG showing some strenght this past little while it is one of the hardest hit miners with today's market selloff. Quartly results coming out in a few days. I do have a significant position in GBG just to disclose my position.
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