Option Investor
Market Updates

Gold bugs might look for 86

HAVING TROUBLE PRINTING?
Printer friendly version

The major indexes continue to trade steady just off their lows of the session with the Dow Industrials off 114 points, while the broader-based S&P 500 Index (SPX.X) 845 -1.69% falls 14 and the broader-yet NASDAQ Composite (COMPX) 1,300 -1.72% shows a 22- point decline.

Earlier I discussed the sector bullishness continues to present itself in the Gold/Silver Index (XAU.X) 80.19 +5.45%, which continues to build gains as the session progresses. However, I also discussed the higher levels of bullish % from Dorsey/Wright and Associates for this sector, which has generated many an e- mail from "gold bugs" on where bull might look for some resistance.

Gold/Silver Index Chart - Daily Interval

I've place a simple regression channel on the daily interval chart of the Gold/Silver Index (XAU.X), and with the bullish % reading of 76% indicating a higher level of risk for sector bulls, the upper end of a regression channel near 86.00 currently might serve as a "blow off" type of near-term top on the XAU.X. I've added very "inflection" points of the bullish % since the XAU.X's highs found early last summer when the XAU.X reached a high near 89.00, when the bullish % reached 82% bullish. While the bullish % doesn't necessarily tell a trader about price action, it evidently has done a good job in the sector for explaining risk and should be monitored and understood by traders.

Jeff Bailey

Intraday Update Archives