How Far Are We Into The Gold and Oil Uptrend?
Gold and Oil, along with stocks, have performed well in the past week as continued weakness in the US dollar has prompted investors to chase asset reflation trades. Is it too late to get into Gold and/or Oil? One way to find out how far we are into the full move is to use Investor Business Daily's (IBD) rules on counting bases. Basically, IBD says that a base is a correction or consolidation period that allows prices to take a breather, but is just part of a bigger trend. IBD starts counting bases on the first correction/consolidation after the bottom, providing the whole move preceding the base is at least 20%. As a rule, it is safe to buy breakouts of 1st and 2nd bases, while 3rd and 4th bases have smaller likelihood of breaking out. Bases only reset if they break the low of the preceding base.
Looking at the daily chart of WTI Crude (Continuous Contract), we are just at the 2nd base of the whole up move, thus chances of a breakout are still high. In fact we might already be seeing a breakout from a falling channel area pattern.
In fact, when we look at the weekly chart, we are just at 1st base!
Look at the daily chart for Gold, we have just broken out of Base 2, so we still have some upside going towards Base 3. Same goes with the weekly chart!
So long as these charts haven't topped out at Base 3 or 4, buying these Oil and Gold commodities and stocks on momentum should continue to provide profitable opportunities.
I will be adding more information on my website in the coming week along with my free market timing signals for the QQQQ, DIA, SPY, IWM, GLD, USO, UNG and many other funds.