Gold stock sentiment indicator.
The shakeout on Thursday has clearly damaged sentiment.
There was a 1% rise in US$POG last night.
The HUI and XAU only rose about 1% as well.
Normally I would expect these to rise around 3% with such a gold price move.
A good deal of negative press out there including the demise of the bull – don’t believe it.
This is reflected in the sentiment indicator which is rising much slower than anticipated after such a sell off.
Silver is rebounding much quicker and has already regained around 25% of its recent falls.
Be nice to see gold hold ground while confidence in the sector improves.
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In the meantime I have been madly trying to update all my gold charts to determine how much damage has been done.
Here is what I have found so far in relation to my trading charts.
Of the 157 charts done (about 120 to go), only 23 are in a down trend.
Many of these had not established an uptrend in the first place so damage has been negligible.
The bull market is still firmly in place.
Of the 134 in a rising trend, 32 have pulled back to trend. Most were in consolidation and yesterday a few broke out to the upside.
Many of the rest are in consolidation patterns but still sitting well above trend.
I have made multiple purchases of stocks that held trend on and after Thursday as these are in optimal buy positions and support (to me) is obvious.
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While updating these charts I read a lot of quarterlies, etc.
Over the last few weeks a number of capital raises ended with a shortfall or were extended.
This is what happens when sentiment is low.
Just as importantly, these CRs have been implemented when current share price is at the lows.
Not good for shareholders.
Clearly many of these companies do not know how to gauge or time the market.
Better going early while sentiment is high than wait till you are out of cash.
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More prosecutions of PM manipulators.
While I expect little to happen ie hardly more than a slap on the wrist compared to how much money has been scammed, their activity also provides opportunity.
It obviously hurts those operating on leverage more than the patient stock holder.
Don’t worry, the market always reasserts itself.
This is one of the few market sectors guaranteed to make money during this recession.
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Will gold pull back further? I don’t know.
As Maxwell Smart used to say ‘Expect it when you least expect it’.
In the meantime you can only trade what you see and not let fear determine a course of action.
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The sentiment indicator is dragging itself out of the last sell-off, though somewhat reluctantly.
For me this suggests the lows could be in. Not only that, the indicator was already showing a change in direction prior to the sell-off.
The US election may be making investors very nervous.
Leading indicators are around the 50% mark.
I am anticipating a nice rise today with POG already on the rise this morning and silver leading the way.
Here is the indicator.
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