Reprint:
"The last couple of comments I have made here regarded gold. They were bullish setups due to oversold RSI and downtrend line breaks to the upside. They worked. Paul mentioned a comment I made a while back regarding the inverse head and shoulder formation that worked out(glad you were able to profit from that, Paul).

Here is an update.
Gold is soon going to struggle with it's 50% retracement (break above is bullish) and more importantly, it may break above the downtrend line of the symetrical triangle - another bullish breakout if it occurs.
Also, above the 50% retrace, is the neckline of a larger inverted h&s than the one we hit before. The target for this formation is new highs if it should confirm.
Due to the high batting average of the past few months, I have to wonder if this will work out as well. You can't bat 1000, but you can pay attention and continue to trade in higher probabilities, if that makes sense.
Gold daily RSI approaching overbought in 7 timeframe, but has a way to go for 14 and 21. Weekly RSI has a lot more upside, so not worried there.
We'll see where we go from here, but this week should be quite interesting and may be the end of the long (quite long) consolidation. Waiting for confirmation of course.
I am not so sure that gold stocks will lead here (due to a possible stock market topping action and fixed costs may rise if oil is bottoming - earnings are coming out soon so watch those), so some prognosticators may miss this move due to looking at $hui/$gold ratios for confirmation, but getting bad signals.
my $0.02"

still watching. $650 is a key number for a lot of traders. A two or three day close above will bring in more $, IMO.

This is exactly why traders need to buy on weakness (in fundamentally bullish markets) when the downtrend lines are broken. If you hadn't, you are now waiting for further confirmation (to say nothing of lost opportunity cost) which if it comes, may actually fail and you have a loss. You've GOT to buy on weakness to keep from getting whipsawed. During weakness, a downtrend line break to the upside usually means that the strong selling pressure is exhausted. Put a stop in place to limit your downside and you will be much more successful than waiting for the trend to be in place (RSI over 50, MACD up, etc.). This type of trade is not perfect, nothing is of course, but it improves your probabilities while also stressing your emotions (which is tough, I know) because it is tough to buy weakness. Good luck and I'll try to keep you posted.

Great comment, g034. Thanks. With the rise in gold, I'm also seeing a renewed weakness in the USD.

Also, oilers are firming here. Do you or others with a keen eye still see linkage?

Also noted that KRY is not participating in this rally. I hope the poetic justice inherent in that will lure give certain highly respected participants here some satisfaction (temporarily, I hope).

I also see the HB stocks are getting run up again -- this time on a sector upgrade from the GS analyst.

Of course, I'm sure that it's merely a coincidence that GS has exposure in the MBS and bond market that would not fare well in a continued housing slump.

The bastards continue to try to talk their way out of the disaster they have created.

Apropos given that tonight American must suffer another SOTU from the worst President the U.S. has ever endured.

Thanks Bill - for continuing to post even when you need rest. However, as I had posted earlier, we would rather see you taking all the required rest at this time.

Will any regular reader comment on WFMI - as Bill had mentioned sometime ago that it will come down to him - it has come down now but has it reached a price where it can be bought?

Thanks in advance.

WFMI

Likewise, Rick, I've been having a look at WFMI today. It's had low RSIs for weeks now. It's tempting to look at it as a bargain, but I can't find a reason why I would expect the share price to start rising anytime soon. A few years from now, it'll probably look like today's price is a good buy. But, the price a few months from now could look like an even better bargain.

I'm inclined to wait for a stock like this to begin to turn around rather than try to guess the absolute lowest point. When it crosses at least the 20-day MACD, I'll be more confident.

Just my thoughts. No predictions.

manx928 has a good point - having said that - I do believe we have an 'accumulation zone' here therefore I will/would start writing puts and building a position.

Good afternoon, Bill. Get well soon. As you said, our health is our most important asset. Blogging can wait.

Nice PM rally today. Found a couple articles yesterday that may interest readers:

IMF to make central bank gold lending data more transparent

(mineweb) A Blanchard & Company study calling for greater transparency in central bank gold lending accounting has apparently helped to convince the International Monetary Fund to adopt a landmark accounting change in the way central banks account for gold loans.

http://www.mineweb.net/american_notes/596209.htm

AND

Goldman, Deutsche Bank Say Double Down on Commodities

Jan. 22 (Bloomberg) -- Anyone who followed the advice of Goldman Sachs Group Inc. last year and invested $10 million in the Goldman Sachs Commodity Index would have lost 15 percent, or $1.5 million.

Like so many of Wall Street's best and brightest, Goldman, the biggest securities firm by market value, says it wasn't wrong, just early, and to expect an 8.1 percent return in 2007.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahZFNv4n70gw&refer=home

Bellcow AEM having a nice day, though i've noticed that in this recent weakness SLW and AUY have outperformed it.

have just become one of bill's apostles and see much written about his use of the RSI indicator.
can someone kindly direct me to an article on his
site about this? does he use exponential or simple RSI? Ditto wilder's smoothing? likewise his theory on 'accumulation' zones? any direction would be appreciated.

last but not least, wishing bill a speedy recovery.

rach3 -

Use the links Trend & Cycle Phases on the right on the main page and Technical at the top to find related posts and info.

if you read Bill's numerous posts you will find many references to rsi. Search "AEM" and read through his comments. He also mentioned that RSI will be discussed in depth in his book. I have added this indicator to my decision process as well, thanks to this site.

thanks, you guys. i will read the material.

rach3 - read the stuff, but here is a very short explanation.

RSI is a price oscillator along with Stochastics, WM % R and MACD.

When RSI (relative strength index) is below 30 the price level has dropped to oversold, Bill's accumulation zone. When a fundamentally strong stock is here, you can start to look to pick up some shares or use long side option strategies.

When RSI is above 70%, it is in oversold, or distribution zone.

RSI 14 period is most popular, but Bill uses RSI 7 frequently.
RSI 7 faster
RSI 14 medium
RSI 21 slowest of the three.

When a stock is very oversold, you will see all three RSI's below 30, then when 7 rises above 14 which has risen above 21, the bottom may be in and the trend is up giving you a possible buy signal.

hope that helps.

Maybe Bill needs a bar at the top for just this, due to the frequent ?'s on it.

It's pretty easy to find the info on the technical indicators. All you have to do is click on the green tab at the top of the page that says "Technical", (right under Bill's picture), and it takes you to Bill's synopsis of technical analysis. And his synopsis has plenty of links to additional resources.

g034,

I'm with number2son on your posts. Great comments! They helped me keep the faith the first two weeks of January. And probably kept me from trimming back more than I otherwise would have today. Gold is just a tough sector to game, and a few words from someone who's been in it for a long time can make a big difference.

Just thinking out loud . . .

Nice to see the Euro finish above 1.30 again vs. the $USD. Now if that can remain above that mark for the rest of the week, PMs will move as g034 mentioned.

Thinking the Fed may provide support to the USD tomorrow after the State of the Union this evening. If the Fed's Dino Kos' successor gets up early, we'll backtrack. If not, and housing disappoints more than anticipated later this week, PMs should get another bump up and hopefully Gold breaks thru g034's 450 and continues up.

The Yen continues to be very weak versus other currencies, while the Chinese renminbi continues to slowly strengthen. Looks like a decoupling and could be a tell if it continues. Japanese goods will better compete with China and overall Japanese companies could do very well selling to everyone. If the Yen goes over 122 to the USD, we could see repatriation of Japanese investment money from the U.S. market back to Japan. Not good for our overall market direction.

This could set up a pair trade of a short index ETF and long the Nikkei index.

……just thinking out loud.

Bush Favors Cutting Gasoline Use 20% Via Renewable Fuels
BY JED GRAHAM
INVESTOR'S BUSINESS DAILY
http://tinyurl.com/25sahz

Does this mean our petro-run cars are now depreciating even faster? I am sure all the ethanol plays will see higher volumes tomorrow. It will be interesting to also observe oil in the AM.