Monday, October 5, 2009

A midpoint support at 76.70 on the hourly chart must hold if the Dollar Index is to avoid relapsing down to 76.31 as the new week begins.

The selloff from the recent high at 188 should be viewed as constructive, since it has followed the creation of a bullish impulse leg on the weekly chart. That said, Goldman has its work cut out for it, since the next push would have to reach a minimum _____, exceeding an important peak recorded in _____, to refresh the bullish trend. A more important peak at ______ holds the key to whether the stock can pull the broad averages higher for the remainder of 2008 -- and, probably, much of 2009.

A thrust above a minor, _____ peak made last Thursday on the way down is needed to get back in bullish gear, albeit a low one.  Failing that, there doesn't seem to be enough fear at the moment to produce follow-through selling the equal of the impulsive move we witnessed on Thursday. It may take a rally of one or two days' duration to set the hook so that bulls can be reeled in, gutted and filleted.

Gold is trading almost exactly where it was a month ago, unable at the moment to push above an _____ resistance on the hourly chart to create a bullish impulse leg, but just as incapable of probing minor targets to the downside.  Indeed, Friday's low at 987.00 "should have" occurred nearly $12 lower, at 975.60, and the fact that the futures never even got close suggests that sellers lack conviction. By week's end, however, we should expect to see the pressure ease so that the futures can begin their ascent to a _____ target we've been using for some time as a minimum upside objective.

“Gold Is Still a Lousy Investment,” proclaimed a Wall Street Journal headline over the weekend.  Does this sound like sour grapes, or what?  It ran atop a feature by Dave Kansas in weekend editions.  Kansas, who used to work for Jim Cramer, is currently European markets editor for the Journal. We wonder what could have possessed him at this moment to do a hit-job on gold, since it is one of the only investment assets to survive the global asset crash of  the last several years.  It is also one of just a small handful of investment assets that is still worth more than in 1999. Much more, actually. And most recently, no matter what kind of news has rattled investors, gold has effortlessly sustained cruising altitude near $1000 an ounce. We also wonder how far back Kansas intended to take us when he wrote that gold is “still” a lousy investment.  The Kitco chart above shows that you’d have to go back more than a decade, to the mid-1990s, to find a time when holders of bullion assets could have lost serious money.  Since then, however, anyone who has bought gold would have nothing to complain about. Far from it, since investors aboard early in the bull market could easily have doubled or even tripled their initial stake. Moreover, there are almost no losers in gold right now, since bullion’s price was higher than the current $1003 for only a few weeks back in March of 2008.  Maybe that’s when Kansas took the plunge? ‘Dead Money’ So what does he recommend as an alternative? TIPS – Treasury inflation-protected securities.  He notes that gold investments were “dead money” for decades, but that it’s highly unlikely TIPS would suffer the same fate. Kansas, at 42, isn’t old enough to remember a time, during