Wednesday, January 25, 2012

Gold and CDNX Breakout Attempts

HOUSTON – On January 18 we penned a piece to let everyone know that the S&P TSX Canadian Venture Exchange Index or CDNX had crossed a potentially bullish technical line in the trading sand – it was then testing the neighborhood just above the popular 50-day moving average.  (See article here.)  Today, January 25, the CDNX inched across another potentially bullish technical hurdle – it staked out some chart real estate just above a downtrend channel with origins going back to March or April, as shown in the chart below.

(CDNX, daily. If any of the images are too small click on them for a larger version.) 

Perhaps as interesting as where the CDNX finished the day is how it did so – on pretty good volume of about 158 million shares and hard upon its high for the day.  That’s not huge volume for the CDNX, but it isn’t chopped liver either.  Important index moves are more believable when they are on good volume.


The Fed’s statement today, following its two-day confab, lit a fire under gold and silver, boosting the buoyancy factor of just about everything mining or commodity related.  That makes this $42.00, 2.5% jump an “event spike” and thus suspect very short term, but it won’t take all that much follow through to convince off side gold bears to haul to the sidelines and re-think the matter given the violence and amplitude of the Fed-inspired gold surge.  For evidence, consider the 2-year gold chart just below, which shows the yellow metal making an attempted breakout of the giant pennant formation we have been talking about for a while.


(Gold, 2-years, weekly.) 

Gold bears better hope that turns into a false breakout and “bull trap” instead of what it looks like, which is a pretty convincing breakout specimen as of the close in New York today.  Gold didn't close hard upon its highs like the CDNX did, but it did close within a USD $5 bill of the high print of $1,713 and change.  And on pretty big volume too. 

Vultures (Got Gold Report Subscribers) note revised stop levels for our Silver and GDXJ trades in the linked charts. 

That is all for now, but there is much more to come. 


The Original
Vulture Speculator

Trading gold, silver and mining shares since 1980 with a focus on taking advantage of volatility extremes, Gene Arensberg analyses the markets through a basket of technical and fundamental indicators and shares his findings from time to time here at Got Gold Report. Mr. Arensberg has been quoted in the Wall Street Journal, Dow Jones MarketWatch, USA Today and dozens of other news organizations.

"I've been a huge fan of Gene and his amazing work for years..."

Brien Lundin, CEO, Jefferson Financial, Host of the annual New Orleans Investment Conference and Publisher of Gold Newsletter

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