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Archive for 03/09/2009
The triangle has broken up and other trivia
03/09/2009 by Philinje.
Well, yesterday gold broke through the tight consolidation range, growing tighter into the apex of a triangle. This looks like a bullish signal and people are jumping in. Next Monday is a minor cycle turn date, or a major one in some models.
This could be a fake-out that gets within range of the February high at $1005. Then a move down will start and it could rest back at $960 or so, the breakout point, before resuming higher, or we could get the more severe pullback that Ron Rosen seems convinced of.
One thing that is absolutely certain is that starting Monday, the summer holiday is over and professional traders will be back at work. This will probably result in some big movements in and of itself. For example, equities could be sold off just to take profits. And the Comex traders could really punish the latest round of gold suckers.
So, at this point selling a bit on Monday may not be a bad idea and just waiting until early October to see how things unfold is the safe bet.
To give you an idea of the variety of opinion out there on what might happen next, here are two articles that tell almost opposite stories. Both of them happen to have good news about gold, but after that the similarities end.
The first article, Flight to Safety Appears Imminent, speculates that the markets are suspecting a breakdown in the banking system, and that is what is holding up gold and bond prices. It also says the dollar will go up together with gold. All the logic and analysis in this article seems sound, and it fits with the scenario that more panic about the financial system is yet to come. Here it is:
http://www.gold-eagle.com/editorials_08/bloom083009.html
The second article, Nikkei Comparison Suggests S&P500 of 1400 by Year End, is based on research from Merrill Lynch Hong Kong that speculates the stock market will move up 40% by the end of this year to around 1400, and then a major decline will take the S&P down to 400 by 2013 -2014. This scenario seems strangely feasible, though the technical logic behind it is fairly abstract. Here it is:
http://www.gold-eagle.com/editorials_08/wilsonl090109.html
Take your pick. Both are not accounting for any near-term decline in gold.
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