Friday, July 24, 2015

More Gold and Fibonacci Retracements:



Last week I displayed a chart - monthly of gold setting out the advance from financial crisis low – of about $700 to the 2011 price peak of about $1900 – then down to the current lows of about $1160 which worked out to be a Fibonacci retracement number of about 62%.

Fibonacci Retracements are ratios used to identify potential reversal levels. The most popular Fibonacci Retracements are 61.8% and 38.2%. Note that 38.2% is often rounded to 38% and 61.8 is rounded to 62%. While 50% was not a Fibonacci number it is a very important technical correction price target.

Today’s gold chart is a monthly of gold setting out the advance from the bear market lows of 1999 through 2001 – of about $250 to the 2011 price peak of about $1900 – then down to the current lows of about $1080 which generates a current retracement number of about 50%. A failure here could take gold down to $895 for a retracement of 62%. Look for the gold miners to confirm when the bottom is in.




Thursday, July 9, 2015

Gold and Fibonacci Retracements:



I was a guest on BNN’s Market Call on Monday and I have to apologize to a BNN caller who asked about gold and a Fibonacci Retracement. I skated around the answer because – without a chart I just stated that 50% was not a Fibonacci number. Fibonacci Retracements are ratios used to identify potential reversal levels. The most popular Fibonacci Retracements are 61.8% and 38.2%. Note that 38.2% is often rounded to 38% and 61.8 is rounded to 62%

Our chart is a monthly of gold setting out the advance from financial crisis low – of about $700 to the 2011 price peak of about $1900 – then down to the current lows of about $1160. The current retracement number is about 62%.

Most interesting is a look at the TSX most actives at the close July 8 – out of a total of 100 most actives only about 15 issues were up on the day – 10 being gold stocks – some symbols, ABX, BTO, LSG, NGD. G, K, ELD, AFM and AR. I just took a call form Fibonacci who thinks now is the time to bottom fish.

Tuesday, June 23, 2015

The Golden Cross Myth:



I happened upon an entertaining item – The Globe And Mail Wednesday June 17, 2015 Jennifer Dowty – CAN STANTEC’S ‘GOLDEN CROSS’ LEAD TO MORE GAINS? Dowty who is a CFA takes the time to explain the technical term “Golden Cross” to us less informed readers. Downty quotes from some unnamed source;

Definition: A ‘Golden Cross’ is a bullish technical indicator for a stock. It occurs when the stock’s 50-day moving average crosses above the 200-day moving average. When a Golden Cross occurs, it indicates that the short term price trend is rising.

So here is the problem – Dowty is just blowing smoke because the so-called Golden Cross is just another urban myth which has been promoted by the business media.I remind Dowty that CFA means Chartered Financial Analyst – not Charting Financial Analyst.

Any technical analyst who has back tested and/or traded on the Golden Cross knows – it generates a 50 per cent outcome – at best. That is because the 50 and 200 day crossover occurs about half-way through the price move. A back test on Stantec from November 2005 to date issued 7 signals with 3 winning trades and 4 losing trades. A back test on Suncor over the same period = 8 total signals with 4 winning trades and 4 losing trades. BlackBerry over the same period = 5 total signals with all five losing trades.

Our chart – daily of Stantac and the Golden Cross clearly displaying the late signals..