Wednesday, February 24, 2010

the cycle wind will be at your back

Ever read the blogs at stockcharts.com? Oh, well then you aren't missing much.

Now that I am 34 and all grown up, I try not to insult other market opinionators, plus it's year of the tiger and I'd hate to have anything come back to bite me, but the analysis of this recent blog post at stockcharts is just an insult to the analysis trade, so I have to point it out. Have a click and see:

GOLD MINERS VS. GOLD FUTURES

Quote: "Unfortunately, we haven't included a Gold Futures price here, but take our word for it: a rather bullish consolidation is confirmed, with prices having broken above the 20-day and 50-day moving averages."

There are more moving averages out there than the 20 or 50, Richard. Like the 60 DMA, for instance:



Yeah, lot's of averages to choose from...

The rest of the post linked to above is even more comical. Could be that gold and mining stocks go the way he forecasts based on some similarity in stochastic squiggles. I doubt it, but hey, you never can be sure.

Christ, I'll just paste half the guy's post so you can read it without clicking the link and losing your spot:

The technical reasons are rather simple:
1) A very large trading range has formed between roughly .025 and .070; each level has been tested multiple times in sequence.
2) A larger bottom was forged in late-2008 much like that of late-2000. If the latter is like the former - and we do think it is, then the cycle wind will be at the back of higher ratio prices for several years further into the future. A minor mean reversion target would be the overhead 250-week moving average, which we think would provide only minor resistance until trading range resistance is once again tested.
2) A clear corrective process has developed in the latter half of 2009, which is above trendline support and mirrors the corrective process of the late-2001 period. Moreover, each of these corrective processes occurred with the 30-week stochastic rolling over from something less than overbought levels. If the current pattern is like that of 2001 - then sharply higher prices are ahead.

Thus, if one were bullish of Gold in general - then one should own the Gold Miners rather than the Gold Futures or Gold ETF (GLD). If were agnostic about the direction of Gold, then the evidence is sufficiently compelling that this would make a great hedged pairs trade.


The Technical Reasons Are Rather Simple!

If The Latter Is Like The Former!

Trendline Support And Mirrors!

Adverb, Gerund, Preposition!

....Alright, no more cheap shots at people till I turn 55.