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-- Posted Thursday, 23 March 2006 | Digg This Article | Source: GoldSeek.com
Rick’s Picks Thursday, March 23, 2006 For investors who’d rather be smart than lucky With gold’s bull-market correction now in its thirty-fifth day, investors in mining shares and precious metals are eager to know whether prices are likely to turn decisively higher any time soon. To save on guesswork I’ve reproduced a chart below of the Gold Bugs Index (HUI). It shows the precise location of four hidden-pivot supports, each capable of producing a dramatic turnaround -- or at the very least, a tradable bounce.
As you can see, all of the prospective supports are relatively nearby. The topmost hidden pivot implies a further fall of 2.4 percent; the lowermost, of 11.8 percent. The most promising of them, 284.40, implies a decline of 4.4 percent. Because these are hidden pivots rather than conventional technical supports, we should be able to tell how much further the HUI has to fall by watching how it interacts with each successive pivot. A rule of thumb in this instance is that, if a hidden pivot is exceeded by more than 0.05 points within 15 minutes of when it is first touched, the next pivot is likely to be reached. In any event, each should show discernible support – enough, presumably, to permit bottom-fishing on the way down using very tight stop losses. As noted above, 284.40 is the most promising of the lot. If you are skeptical that my hidden pivots “work,” watch these numbers closely when the HUI first touches them and see for yourself.
A caveat: Call options in the HUI are much too illiquid to trade, so you’ll have to substitute another vehicle if you plan to play. A component of the index itself should suffice for this purpose, and it could therefore be any of the following: Bema Gold (BGO), Newmont Mining (NEM), Kinross (KGC), or Hecla (HL). Some other stocks included in the HUI, which comprises a basket of unhedged gold stocks, include Agnico Eagle (AEM), Eldorado (EGO), Gold Fields Ltd (GFI), Meridian Gold (MDG), Coeur d’Alene (CDE), Harmony Gold Mining (HMY), and Freeport Mcmoran Copper & Gold. ***
Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2006, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Thursday, 23 March 2006 | Digg This Article | Source: GoldSeek.com
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