Gold Bounce

Posted by downtowntrader | 5/22/2006 09:55:00 PM | 1 comments »

I'm having problems with blogger uploading charts so I will post the charts tomorrow. I will still discuss what I am seeing though.

There are tons of hammers on the charts tonight and actually I am seeing a lot of consecutive hammers after Fridays reversal too. Keep in mind that the smart money closes the market and we have had two consecutive "halfway decent" closes. I can't say they were bullish because we haven't taken out any resistance at all. One of the things am looking for are stocks that have yet to make a lower pivot low. A pivot low is the low of the last leg up. These are the stocks that are maintaining their uptrends and may move to new 52 week highs on the next leg up. Most of the stocks that made lower pivot lows are more then likely destined for a retrace up followed by possibly another lower low.

Some of the stocks that I found tonight meeting this criteria were ADS and EMCI.

Other stocks that look bullish to me are as follows:
ADM: Two hammers into support. Watch for a break higher.
DRIV: Take a look at a 2 or 3 year chart on DRIV. Draw a line over the previous 52 week highs and notice that DRIV is consolidating above previous resistance. If DRIV breaks out of the current two month triangle the move could be outstanding.

It looks like gold and metals in general are ready for a bounce up. The gold and silver charts are touching support and had long tails today closing near the highs of the day.

I am liking GLG,GG and SLW in the metals group. SLW held up better then PAAS,CDE, etc. on the recent pullback.


While I am what most would consider a pure technician, I have been a gold bull for more then just the technicals. Here is an article that a friend passed on to me that summarizes what I tried (and I'm sure failed) to explain in an earlier post on gold. The bottom line is that the increase in gold and commodities in general can be tied to the world not being fooled by currency manipulation.


Also, a reader named Jim had asked about boom after todays action. BOOM came back to test the gap as support and sucessfully held and reversed again. It looks to me like BOOM is headed up to retrace some of this leg down before coming back down to test support. It is too early to tell if it will come back to 26 but my expectation is for at least a 38.2% retrace into the 31 area. I added more today, but I will add that BOOM is in a correction and not headed to a new 52 week high anytime soon in my opinion. However, the rebound is tradeable.


I will post all the relevant charts tomorrow.

Good Luck,

DT

1 comments

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