New Buy Signals for Gold and Oil

Wed, Aug 8, 2012 - 3:29pm

Yesterday's market action began in a boring fashion and got more boring as the day wore on. There were, nevertheless, four new BUY signals generated.

Gold and crude (USO) both generated new BUY signals (from neutral). We will discuss these later in the report.

Two new BUY signals were generated on the Materials (XLB) and Equal Weighted Materials (RTM) sector indexes. This was the result of the PBI crossing up through its EMA. It also happens that the 20-EMA is above the 50-EMA on both charts, making the signals a little more solid. There is still the problem of the choppy, sideways price action that, if it continues, will put these BUY signals in jeopardy.

STOCKS: Based upon a 06/29/2012 Thrust/Trend Model BUY signal, our current intermediate-term market posture for the S&P 500 is bullish. The long-term component of the Trend Model is on a BUY signal as of 1/5/2012, so our long-term posture is bullish.

Prices are hesitating at the line of resistance, forming something that looks like a flag over the last three days. It could also be a short-term top forming. The PMO is at 1.03, considerably below 2.00, which has been the overbought level in the last 12 months, so that is positive.

Ultra-short-term indicators are topping, which is a pretty good indication that a short-term price top is about to appear.

Short-term indicators are still rising, and they are just slightly overbought.

Intermediate-term indicators have crossed up through their EMAs and are looking more and more positive.

Conclusion: Ultra-short-term indicators are calling for a short-term price top, but short- and intermediate-term indicators allow for a continued advance after a short pullback.

GOLD: As of 8/8/2012 Gold is on a Trend Model BUY signal.

A new BUY signal was generated today as the 20-EMA crossed up through the 50-EMA. This is objective evidence that price movement for gold is positive, but a look at the chart doesn't reveal any obvious enthusiasm.

CRUDE OIL (USO): As of 8/8/2012 United States Oil Fund (USO) is on a Trend Model BUY signal.

A new BUY signal was generated today as the 20-EMA crossed up through the 50-EMA. We can't say for sure that the rising trend will continue, but this chart looks more positive then, say, gold.

Technical analysis is a windsock, not a crystal ball.

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