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Truth is timeless: “Markets never change” – Jesse Livermore, 1923 The early masters, Livermore, Wyckoff and Loeb isolated themselves from the crowd and crowd thinking. None of them ever graduated high-school and yet they each became legends in the market. Their techniques have been time-tested.... More
  • Market Update: GLD In The Middle 1 comment
    May 4, 2014 9:11 PM | about stocks: AEM, GLD, NEM

    The past week had another round of activity for the gold miners.

    Agnico Eagle Mines (NYSE:AEM) moved sharply higher while Newmont Mining (NYSE:NEM) looks like it has trapped the bulls with a false breakout.

    The market Vectors Gold Miners EFT (NYSEARCA:GDX) posted a weekly reversal bar two weeks ago. However the week just past has failed to capitalize on that reversal and make a new weekly high.

    Looking at the monthly chart of the SPDR Gold Trust ETF (NYSEARCA:GLD) below shows the potential to move either way.

    (click to enlarge)GLD Monthly Chart

    Chart by TeleChart

    GLD is right in the middle of the wedge formation. This is no place to initiate a trade or take a position. When GLD approaches the boundaries of this wedge formation (up or down) we will then be able to discern the most probable direction.

    The thesis remains that the gold market may be moving ever closer to a wash-out or capitulation event. There are just too many that are still bullish for a long term, multi-year advance to occur.

    This link has a report on the sentiment index of gold. From a wash-out event standpoint, I would be looking for sentiment to go to -80 % to -90% or more.

    These types of negative sentiment levels (for the overall market) were obtained in the S&P during the melt-down in 2008 - 2009. So, it does happen and has occurred in the recent past.

    At the same time, this does not mean that there are no short-term opportunities. AEM is a good example of what can happen with brief moves. From past experience though, once the focus is put on short-term action, then one tends to become blinded to the larger set-up that may be afoot.

    So, we are staying focused on the bigger picture and not planning to initiate a position (long or short) at this time.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: AEM, GLD, NEM
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  • zaw77
    , contributor
    Comments (54) | Send Message
    Thanks for the update!
    5 May 2014, 01:51 AM Reply Like
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