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Reason for Hopeful Pessimism on Gold

It’s not great, but there are benchmarks that would signal that this pattern may be turning bullish.

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Short term cycles have turned up. The 4 week cycle projection is a nice target, but there are no guarantees here. It would certainly be helpful to the bigger picture if it is reached. The 13 week cycle still has some vulnerability for 3-6 more weeks. A breakdown below xxxx (in subscriber version) would be a bearish sign as it would complete a head and shoulders top pattern with a measured move target of around xxxx.

Gold begins December below a couple of key trendlines on the monthly chart. It would need to end the month comfortably above xxxx to reduce the risk of another slide that could carry into the xxxxx. Conversely, if it ends the month above xxxx, that would be a bullish sign.

As for the mining stocks, the shortest cycles rebounded due to the rally of the past 2 days, but that wasn’t enough to keep the 6 month cycles from falling to the sell side. 13 week cycles remained at more than 90% on the sell side. With 6 month cycles now negative and not yet extreme, any bounce xxxx xxx xxxxx xx xxxxxxxx (in subscriber version).

There are 34 buys and 2 sells from the swing trade screens of 52 gold mining stocks from Tuesday’s action. I looked at the charts, and these buy signals did not impress me as anything more than a dead cat bounce that would probably fizzle out. I decided to wait for better setups before re-entering after closing all but one of the picks that had been on the list in previous weeks.

The 7 picks closed out from November 2 through December 2 had an average gain of 9.9% with an average holding period of 43 calendar days. Not bad considering how uneven the performance of the sector has been.

1 pick hit its stop over the past week and was closed as of the stop price with a gain of 23.4%. That left just one pick on the list, hanging on with a loss of 1.2%. I’ve tightened the stop on that one.

See table and charts (subscriber version).

The strategy and tactics suggestions in this report are for informational and entertainment purposes, and illustrative of one approach. Nothing in this report is meant as personalized investment advice and you should not construe it as such. No representation is made that it is the best approach, will be profitable, or suitable for you.

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Posted in 3 - Gold Trader
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