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Gold stock correction not over yet, but some stocks becoming oversoldClif Droke
GSR snippet
When we examined the XAU index in the October newsletter it was noted that the resistance starting at 115 was very strong and would possibly succeed in holding the XAU from making further gains in the near-term. This proved to be the case as resistance pressure - combined with bearish seasonal pressure - kept the XAU index from having a winning month. The XAU did, however, find support above the 105 pivotal level referenced for support last month, which represented the 60-day trend line intersection in the daily chart.  For November I recommend that we continue to watch the 60-day moving average intersects in the daily chart (which currently intersects at 105 as of Nov. 7), with a violation below the 60-day MA constituting a preliminary breakdown of the uptrend. What would probably happen next if the 105 level was broken would be a test of the 100 area where the 90-day MA currently intersects. This is a potentially strong pivot, however, and should provide a measure of support for the XAU in the near-term. The XAU remains in correction mode in early November and a few more weeks of consolidation will likely be required before the next sustained upside move can be made. The list of 10-week new highs among gold stocks has shown some improvement since the beginning of November but is still far from where it was in September and needs to show even more improvement before we have confirmation that the gold stock correction has formally ended. Also, the gold stock advance/decline line that I follow each day based on the stocks contained in this report is coming off a 5-month low but still in negative territory and therefore in need of further improvement. For now, we'll assume the broad market gold stock correction is still underway until these two indicators signal that a reversal has been made (at which time a GSR Update alert will be e-mailed to all subscribers). More follows for subscribers. You can subscribe to the Gold Strategies Review ($21) here. --Clif Droke |
