The rally looks suspect so far so I'm taking ST scalps here. The scalping has been good too. However, waiting for a retest of 163-165 area and hopefully some volume hits to confirm that potential bottom. If not, new lows coming for the HUI. ===============================================================
G'morning ld, The old "when in doubt, get out" play, I see. It makes sense to me as I still don't see the 'makings' of a sustainable rally while the USD refuses to play dead.
A fellow gold buff PM'd me a hearty endorsement of Vronsky's (who is he?) GoldHeart/GEGFI Buy/Sell Indicator as being an excellent tool for calling turns in the gold market.
As you may know, I'm not a big TA guy and I was wondering you are familiar with it and if so, what your take on it's effectiveness, or lack of might be?
Any and all other responses would be appreciated.
GoldHeart/GEGFI Buy/Sell Indicator
The GoldHeart Indicator was developed using the GOLD-EAGLE Gold Fund Index (GEGFI). It shows when gold equities are in "oversold" or "overbought" conditions. An oversold condition presents a timely opportunity to add to share positions, while an overbought condition presents the opportunity to take profits on trading positions.
Overbought conditions, or sell signals, occur when the indicator approaches 20 or below on the indicator chart. While oversold conditions, or buy signals, occur when the indicator approaches 80 or above. These regions demonstrate good correlation to future turning points in the gold equities market.
Ideally, buy and sell zones should be used to begin dollar cost averaging in and out of positions. Examination of past GEGFI correlation with the GoldHeart Indicator demonstrate reasonably reliable price reversal areas. Consequently, the indicator should help investors to make more prudent and timely buys and sells.
Indicator last updated May 17, 2004
Current Interpretation: Great News! If GEGFI stays just even today or goes higher we will have inflection and turn in the MT wave as of LAST FRIDAY. This turn has been a long time coming, and is only part of the good news. The LT wave is also just a hair away from the oversold trigger (80) and both waves are now joining forces. These extremely oversold conditions are signaling a unique opportunity.
I would like to show you what has occurred when both oversold waves joined forces in the past. The moves in GEGFI that followed were consistent 4 out of 4 times and I don't expect things to be different this time. On the contrary, I expect them to be better.
On the Gold chart below I have indicated in red circles the four similar periods (A) - (D) , and also our current period (E). Observe the following:
(A) The MT and LT waves first peaked in oversold territory around 10/00. Both those waves were extremely oversold and exceeded our traditional trigger point of (80). The proximity of those waves were just about the same as they are today at the current position (E). Note the GEGFI action following (A). These oversold waves resulted in the "Birth of the Precious Bull".
(B) After the birth of the bull, GEGFI trended higher and oscillated through a few overbought periods gaining new believers along the way. As always, it gathered some selfish profiteers homing in on the scent of money. It is during this early period that we established our upward trend. When both the MT and LT waves peaked simultaneously again in 10/01, at a position somewhat short of our traditional trigger point of (80), both waves turned bullishly south beginning our first accelerated move to the first cycle blowoff top. GEGFI roared upward for nearly 6 months to it's peak. Them were the days. Life was sweet for the seekers of justice.
(D) After subsequent correction, consolidation and churning we again reached oversold conditions around 10/02 where both the MT and LT waves met up again in oversold territory and began to lift our depressed GoldSpirits with a few impulsive jolts that woke us up to the fact that there was life after correction. At that time Goldhearts were skittish similar to our recent mental state. We oscillated through a few overbought conditions, but our trend remained in tact until around 3/03 when the MT wave reached extreme oversold condition with the LT wave lagging much further behind. With the turns in those waves the results were a resurrection of Goldhearts as the previous correction was quickly forgotten. Once again the race was on to the second cycle peak. That peak and second cycle blowoff was remarkably similar to the first cycle end from the point of view of overbought MT and LT wave patterns. You can see those at the dashed black lines at GEGFI cycle ends.
After the second blowoff our spirts were once again depressed but our trend continued intact, however we were at a higher GEGFI level. Once again we were put to the test as profiteers and traders played the negative side of the move and we wondered whether the second major correction/consolidation would ever end. We once again doubted convictions and our strength to hold shares tightly through it all. But as Rocky would say, " I'm still here ain't I ".
(E) We have again arrived at the best of all worlds for Goldhearts; EXTREME OVERSOLD conditions in both the MT and LT waves. We have just to realize that opportunity is knocking once again at our doors. We as GoldSurfers dream of the day when we can catch the big GoldHeart waves in their most perfect oversold conditions. The sound of the surf should now be load and clear. We had four out of four great up moves in GEGFI as similar conditions unfolded in the past. You must now decide if it will be five for five starting about now. Ask yourself if you have been here before and should it be any different this time?
I have updated both Gold and Silver charts below through 05/14. Be back soon. GoldHeart (May 17, 2004)
GoldHeart & SilverHeart Indicators Disclaimer
The GoldHeart & SilverHeart Indicators are merely other technical tools an investor may take into account as part of his total Due Diligence. The data used to create the GoldHeart & SilverHeart Indicators are believed to be reliable but are not guaranteed as to their accuracy or completeness. Furthermore, past performance of these indicators in forecasting reversals may not be construed as indicative of its future performance. Moreover, the GoldHeart & SilverHeart Indicators should not be construed to constitute personal investment advice. You should always make investment decisions based on your own personal due diligence. These indicators are solely provided for informational purposes.
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