Another fast post on the endlessly entertaining movement of gold and the HUI gold miner's index. I've come to the indifferent conclusion that gold's first C-wave intermediate cycle is about to finally bottom. I know this sounds bad, but if price can now trade just a tad below $1626 I think that may well be the end of what I can only characterize as the most bloated intermediate cycle in the history of gold's secular bull.
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The upper indicator is the Money Flow Index. I have never been able to prove to my satisfaction a little theory I have about the MFI but I'll share it with you just the same. I have a concept in my mind of a dry sponge - this is what I picture when the MFI (10) has a very low reading - like below 30. And then the sponge begins to soak up some water. In our case, it is buyers taking positions as the indicator begins to rise. But the stock price does not rise. Not yet, anyway. Then as the sponge gets about half saturated price begins to take off. The sponge fills more until it is utterly saturated and price continues to rise.
Anyway, I have also noticed that a reading of about 50 seems to indicate that there are enough investors in for the longer ride that they are very unwilling to sell just because price takes a quick dip. That may sum up where I see gold with respect to money flow right now. The indicator is like a sponge saturated with water and price has not (yet) rewarded the faithful.....but it will.
The True Strength Index indicator TSI (7,4) shows that a bearish trend line break sell signal was generated today. However, the descending TSI trend line of the past couple months will be available for breakage just below the ZERO reading and that is going to yield a powerful BUY signal.
The HUI gold miner's index is looking like a roll of the dice very short term. The TSI setup could turn into a positive divergence BUY signal or a trend line break (TLB) SELL signal. Being an optimist I hope 372.7 price level is not breeched and this goes down as I wrote about a couple of posts ago.
We should find out how all of this is going to turn out by the end of the week, if not sooner. As far as I can tell, it should turn out GREAT!