Gold's Unique Technicals. Survey Says Buy!

Gold's Unique Technicals. Survey Says Buy!

By Stewart Thomson | 17 March 2010

1. I want to talk about charts a fair bit today, because a lot is happening there. The Dow, and a number of the Dow component stocks like General Electric, are showing substantial technical breakouts on the daily and weekly charts. These are not small actions, technically speaking. Very strong resistance is being taken out on the upside by a number of blue chip stocks, and what I term the King Daddy of technical indicators, the 15,9 series of Trix on the monthly chart, shows a crossover buy signal. Here's a picture of GE.

2. GE Major Upside Breakout on MASSIVE volume!

3. What are the implications? First off, in regards to team "technical upwedge failure, short it bigtime it's just like 1932"!, unfortunately, team wedge has been turned into Team "help me mommy, I'm on fire"!, by the surge of institutional money pouring into the market.

4. Second,? I sell upside breakouts, I don't buy them. Those who bought into Dow 6500 are now in profit-booking party mode. The daily chart RSI is extremely overbought, although the weekly chart suggests further gains are possible, even in the very short term. In terms of what actually transpires, I really don't care.

5. Here's a look at the monthly chart for the Dow.

6. Notice the 15,9 series of the Trix indicator. Gargantuan buy signal. I spoke of the drastic low level of the Trix as I bought into Dow 6500 and said at the time the Dow could rise thousands of points higher, before even giving a monthly chart Trix buy signal that would send it thousands more points higher. That is exactly what has transpired.

Regardless of any short term noise, this is a market that wants to go higher, and likely way, way higher. Why? What does the Dow "see" ahead? It might be a continuing recovery, that's one possibility. It is a factor, to a degree. I think a vastly bigger factor, one totally ignored by the world's investor public, could also be:

7. US Dollar Devaluation Chart. Jim Sinclair has referred to the USD chart as "like Enron's chart". He's not talking about the 3 second tick chart, in case you are wondering. The rally is failing, and the horrific look on the US dollar daily chart, if it takes a nosedive, could turn the monthly chart very very negative, suggesting an entirely new leg down is likely near at hand. Here's a look at the USD Daily Chart. [[FWIW, I do NOT see the dollar tanking; I expect a strong dollar and weak Euro and Yen for the foreseeable future; although the Euro could reach $1.40 before retreating as low as $1.18! Strong currencies are the Canadian and Aussie dollars.: normxxx]]

8. Under 79.50, and it will be a bail and fail stoploss extravaganza for the fundsters, who price chased the buck all the way up. They are already on fire, since they bought their bigger positions at the highest prices. That would trigger a profit-booking mega party for the banksters, who are holding all-time record short positions in the USD index.

Bottom line on the daily chart: Uptrend broken, head and shoulders mini top failing, indicators overbought on both the daily (and weekly chart for that matter) and flashing sell signals. Quick, get to the pawnshop and sell all your gold, because the lobotomized man on TV said so! "Look mommy, I blew a big gold bubble with my gold coloured bubble gum, sell all your real gold and buy Gman bonds, he's my hero"!— Gold Bear Team, Mar 17 2010.

9. Still, I want to caution those talking about major govt defaults on their bonds. YOU will likely default long before the Gman does, because he'll make you default. Do you seriously think that if the Gman is totally out of money, if his printing press doesn't work anymore, that he'll default? Wrong, wrong, and wrong. The Gman, almost without exception, has a 5000yr history of turning into a real monster when faced with drastic loss of power.

Just as he stole all your gold in the 1930s, then repriced it higher for himself while leaving millions of already-impoverished taxpayers on the breadline holding the devalued USD toilet paper bag, he would seek to take what you have to save himself again, if faced with a real default situation. We'll all be stuck into internment camps long before the US Gman defaults on his bonds. I'd say he's more likely to nuke his own people than to default.

Think about that, especially given that I see the US Gman's financial situation as potentially terminal, given the triple combo of a. unfunded liabilities; b. OTC derivatives ($500 trillion of which suddenly no longer exists!?! …how do you go from $1.1 quadrillion to $600 trillion in 6mths, via 'contract offsets'? [[Maybe the reverse of the way you got to $1.1 quadrillion in the first place: by "destroying" credit (instead of "manufacturing" it— from "thin air"!): normxxx]]
Answer: You pretend you did. I don't believe there's any less than $1 quadrillion in OTCD's outstanding. The $600 trillion number was created by mass marking to 'model' and 'special' accounting); and c. the banksters' scheme to move US wealth and technology to China and make it the 'new' USA, exactly as the USA became the 'new' UK 100 years ago [[hardly likely; the banksters have little or no control of China, whereas they own the US government— as recent support of Wall Street at the expense of the entire rest of the world just proved!: normxxx]].

10. The Gman claims inflation is how to create wealth. [[Not 'inflation' exactly, but "paper", eg, that $1.1 quadrillion in derivatives: normxxx]] Whatever happened to inventors and engineers and workers building products and selling them for money? That's how to create wealth, not by devaluing money non-stop for 100 years. "Good news, you're richer now. I just devalued your money"!— The Gman. [[Or, "I 'amplified' it, via leverage/derivatives"— the banksters.: normxxx]]. Sadly, the population actually believes the Gman [[and/or the banksters: normxxx]].

11. Moving onto the GDXJ Daily Chart we see the same high volume breakout here that we are seeing in the general equity markets.

12. Again, I cannot overemphasize the importance of gaining a market neutrality, as opposed to the general gold community trend of bashing the stock mkt and attempting to 'top call' it non-stop. While gold can rise while equity markets fall, that's a bad scenario, and could involve market closures. It's not a good situation for your gold stocks.

13. The good news is the stock market looks powerfully higher, although the current strength must be sold, not bought. A rising gold price combined with rising general equities is an extremely bullish situation for gold stocks, and it is a situation that is here and now.

14. Seasonally, gold tends to have an upblast from around now for a period of around a month. I would be an aggressive buyer of all weakness, and I've taken some time to point out the fact that gold's daily movement (volatility as measured one way by average true range) continues to decline. See the indicator at the top of this chart: Gold Average True Range $17. [[Nevertheless, don't expect to see the major upmove in gold until October.: normxxx]]

15. We are getting a bit of a pickup in the price range, but not much.

16. Waiting for the "big correction to gold sub $1000" might work for you. I don't see many of my richest subscribers, some who are real billionaires, taking that route. [[Better/safer: accumulate gold on all major down moves; same with gold mining stock, which also moves down with the stock market.: normxxx]]

17. The banksters see our positions in the market. Unless you are holding massive positions, they really don't care about you personally. They care about tracking the margin levels in the accounts, and picking off stop loss orders en masse when margin levels are low, in terms of cash to positions held. [[Bettert/safer to use 'mental' stops and close out/initiate positions the next day after one is triggered.: normxxx]]

18. You don't need to have deep pockets to succeed in the market, but you absolutely need to appear to have them. Gold has charged to the 1130-1133 area, and sold off again. It's down about 10 dollars. If you buy too big, the banksters will take you out on a future hit. The stock market looks great in the bigger picture, but it is short term overbought, and a hit there could affect gold [[especially the gold stocks: normxxx]].

19. Think about this: As I prepare to send this off, gold is about 1125, down about $8 from this morning's highs. If gold were to soar to say, $1145, are you going to be kicking yourself that you failed to buy?

20. There's your answer on how much to buy, here and now. Buy just enough so you are not kicking yourself at $1145, but not bailing in terror if we go back down to $1100 [[and if we take out $1050, we could easily drop back as low as $700!: normxxx]].

21. In the bigger picture, you need to be able to mentally handle both gold $700 and gold $1400. That's critically important, and that big picture is made up of many smaller move components, like today's action. Unless you are Babe Ruth, you need to take action here today. See you out there. On the gold buy battlefield!