The analysis presented is the view of a pure market technician. There is no attempt to present any fundamental data or information as that is not the expertise of the analyst.
You don’t want to go out there and fill up your gas tank. Oil seems to be on a tear with nothing to stop it. Well, nothing except sentiment reversal. Are we there yet? Maybe or maybe not. We’ll look in on the immediate term oil action in a moment but first, gold.
Short term gold is still on within a solid bull move. It’s above a short term positive moving average line. However, the rest is getting kind of iffy. Short term price momentum had been inside its overbought zone and then crossed below the overbought line for a negative short term trend indication. Wednesday say the indicator turn back up again but not yet back into the overbought zone. As for volume, the indicator is just about to cross below its short term moving average line. As for the daily volume activity, it’s in the realm of pathetic. One wants to see a lot better upside volume than we have had over the past couple of weeks. On the short term I’m still bullish but note that this could change quickly.
As for the immediate action, the Stochastic Oscillator is still inside its overbought zone but is heading down and has crossed below its trigger line. Suggestion here is that the bullish action of Wednesday may not continue. Should gold close above $445 (Dec futures contract) them all bets are off.
U.S. DOLLAR INDEX
The US$ Index broke through its short term up trend line and support to give us a confirmed short term bear signal. The projection on the break was to the 86.75 level, which it just about made before setting up a new support at the 87.25 price. Should it break below that support, that would be a much more serious break. The indicators are pointing lower with price momentum in the dumper and volume action going to the negative. However, the aggressive Stochastic Oscillator is trying to gain some upward strength having moved above its oversold level but seems to be stalled at this time. The indications are for more downside ahead but there just may be a very short attempt at a rally.
TEXAS LIGHT SWEET CRUDE
Well, crude is about all what one can say about the pump gas prices. As for the futures, oil is projecting now to the $74 level by its recent upside break. That sounds a little optimistic but you never know with oil. The price moves look terrific but when you get into the indicators there seems to be some hesitation by the speculators. Volume, although still positive, is getting weaker and price momentum is still below its March high. As I have often said, go with the flow (trend) but keep your exit strategy on a short leash. As for our aggressive Stochastic Oscillator, well it is inside its overbought zone and seems to be ready for a topping out but is still above its trigger line. It may be another day or two before it tops out and reverses. Expect some more upside in oil before any meaningful reversal.
See you on Monday for the full week-end review.
Merv Burak, CMT
Hudson Aero/Systems Inc.
Market Technical Information Group
During the day Merv practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv dons his other hat as a Chartered Market Technician (CMT) and tries to decipher what’s going on in the securities markets. As an underground surveyor in the gold mines of Canada’s Northwest Territories in his youth, Merv has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv’s driving focus is to KEEP IT SIMPLE.
To find out more about Merv’s various Gold Indices and component stocks, please visit Merv’s Precious Metals Central. There you will find samples of the Indices plus other publications of interest to precious metals investors.
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