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Power Market Update - Gold to Bounce From Here (8/16/06)

Submitted by Mike Swanson on Wed, 2006-08-16 07:49.


Gold and gold stocks are deeply oversold on 60 minute charts. Notice that the 60 minute stochastics for gold have been oversold for the past several days. What is more yesterday gold stocks closed green while gold closed in the red. Gold is poised to bounce from this level. A gap down today would be a buying opportunity. We'll see if we get it.

I think it likely that we'll bounce from here and then see the XAU go back up into its recent 142-150 trading range where it will consolidate for the next 1-3 weeks before breaking out again ahead of the September Fed meeting. I'm fully invested and am looking for a safe entry point to go on margin ahead of the breakout. I'll either buy towards the end of this next consolidation period or if we get some point in which gold comes down to test these lows while the gold stocks hold up. This latter scenario is the most likely one.

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