| Technical Analysis $XAU $GOLD $USD $HGX NASDAQ SMH Pivots |
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| Saturday, December 2, 2006 |
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Weekend Update - $Gold, $XAU, $USD, $SPX, $COMPQ, $HGX, & SMH
$Gold - Continuous Contract (End Of Day) INDEX - Weekly Chart
The weekly chart illustrates that GOLD has broken out of a symmetrical triangle pattern within the larger ascending triangle pattern that is now forming. $Gold has been on fire ever since the breakout in this October/November, and it continues to go higher. If you look at the past rallies over the last year, you can see that $Gold morel or less traveled along the 13 day EMA, and it was until $Gold corrected that it followed the 34 / 50 day EMA. Gold is back in an uptrend and you can see that because the moving averages are turning back up. However, be aware that $gold could be ready for a small pullback. Nevertheless, the trend is starting to get bullish. There is already a disconnect between the Metal and the stocks. The stocks are already outperforming the commodity, which is a bullish indicator. Furthermore, you can see that although the Aroon is still in a bearish trend reversal, the PPO, RSI and Stochastics are bullish. The Aroon indicator should turn bullish fairly soon after a short pullback.
The Gold and Silver Index- Philadelphia ($XAU) - Daily Chart
The weekly chart of the $XAU illustrates that it is in the process of completing it's wave 3 to wave 4 corrected -- it may already be over. You cans also see that wave 3 never overlapped waves 1 and 2 which is an indication that the $XAU remains in a solid uptrend. Nevertheless, $XAU is till in a bearish trend reversal and the Aroon indicator is still bearish. Other indicators and oscillators are starting to turn upwards. The big move is yet to come in terms of getting set up in precious metal stocks, that is why I am still sending out alerts to enter this sector. The risk reward is still low -- please look at the pivot table.
The US Dollar ($USD)- Monthly Chart
The dollar has been in a bearish trend this year, and you can see this on the monthly chart. The $USD back kissed the uptrend line at the end of 2005 and then has kept going down ever since. The USD has gotten clobbered in the past 2 weeks, but it has not taken $80.39 and it has not taken out the down trend line. The bottom line is that the $USD has not yet made new lows. Although, $USD is not so fresh, and it just went into bearish trend reversal on the monthly, which as older subscribers will note, will often cause a counter trend rally. Despite this, the indicators and oscillators are still bearish.
The S&P 500 Large Cap Index ($SPX) - Daily chart
As you can see from the daily chart, the $SPX has been trading in an up trending channel ever since the middle of July this year. Although there is negative divergence in the RSI, the $SPX bounced nicely off of the lows and off of the uptrend line. I don't think that is bearish action. The $SPX still looks bullish to me. It doesn't pay to think short yet until will we get a good rollover that breaks the uptrend line. Top calling this whole rally has been fruitless and not worked! It won't happen until it does -- so remain bullish until then. Price changes everything, and there is not enough volume to make it a distribution day. Furthermore, the stochastics are pointing back up.
NASDAQ Composite ($COMPQ)- Daily Chart
On the daily chart you can see that the $COMPQ has, like the $SPX, also traded in a strong up trending channel since the middle of August '06. This week the $COMPQ took out the uptrend line and hit the 34 EMA, which is a magnet for healthy pullbacks. Do not be shocked by this action, until the $COMPQ trades below that 34 EMA we need to stay bullish with selective tech stock. The $COMPQ remains bullish despite negative internals. To me this looks a buying opportunity. It is still not time to short yet, let's wait until the oil stocks have topped. The shorting time has not yet arrived and it won't until some time next year. Let us enjoy the oil rally in the mean time. The momentum is in the energy sector.
Note: if you are in the chat room -- we may Day trade EFUT live in the room. We for me to give the signal.
The Housing Index - Philadelphia (HGX) - Weekly Chart
I like this index on the monthly because I don't think the top is in yet. The weekly chart illustrates that it has finished it's ABC correction and the moving averages look like they are beginning to point up and will converge soon. The $HGX has overlapped the 23.61 level which is bullish. In addition, you can see that the $HGX has just had a bullish trend on the Aroon indictor and the rest of the indicators and oscillators are bullish. However, it is not time, just yet, to go long this sector until I get reacquainted with it.
Semiconductor Holders ETF (SMH)- Daily Chart
As much as I would love to continue to bash the SMH, my intermediate term target is around 2700 for the $COMPQ, and this price target cannot be reached without the SMH participating in the move. How this NASDAQ rally has occurred without the participation of the chips is absolutely beyond me. There has to be something going on here with the SMH. For whatever reason I believe the powers that be are going to take the SMH higher towards the end of December and rally into January for the January effect to take place. It may be that Bullish sentiment alone, moves the SMH higher despite the current negative internals within the NASDAQ. We can go higher on thin air and defy all logic and fundamentals, and until the top is on we cannot short the COMPQ or the SMH. My gut instinct say they (PPT) are going to take the SMH higher. Indicators and oscillators are in a bullish trend reversal albeit weak.
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$XAU
$USD
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