Technical Analysis for XAU Index and Newmont Mining

By: Erich Soltes | Sun, Apr 3, 2005
Print Email

On a Daily, Weekly and Monthly Basis

This report will examine the XAU Index and Newmont Mining on a daily, weekly and monthly basis. A technical analysis for each securitys chart will be presented with an explanation on where the security is currently. It will also provide an explanation of what price action needs to occur to maintain the prevailing analysis. Additionally, long term and short term support and resistance prices will be provided.

First a little background information on the Alpha Trend Analysis system...

This system has been in development for almost 15 years. The Alpha Trend is the primary trend line that I have created to analyze the prevailing trend of a security. It is an adaptive moving average using trigonometric functions. It is from this primary trend line that all other formulas are derived. There are six moving average trend lines that are used to analyze a security. The short-term indicators are upper and lower bands, which are 2 days in length. The mid term indicator is the Alpha Trend, indicated by the bold red line, which is several weeks in length. Lastly there are three moving averages of the Alpha Trend. The one-year moving average, which is red colored. The five-year, which is bright green colored and the ten-year, which is black colored. The chart contains two windows. The top window indicates whether the current position is long, short or neutral. A long position is indicated by one (1), a short position is indicated by negative one (-1) and a neutral position by a zero (0). The bottom window contains the security's information along with the six moving averages. At the very bottom of the chart the primary trend of either bullish or bearish is indicated.

XAU DAILY CHART

Primary Trend BEARISH

Open 94.66 High 94.67 Low 93.65 Close 93.73

Current Position Long 1.0

Alpha Trend 98.85

Upper Band 93.95

Lower Band 92.77

1yr moving average of Alpha Trend 94.23

5yr moving average of Alpha Trend 73.19

10yr moving average of Alpha Trend 82.36

Sell price 94.67

Above is the daily chart for the XAU Index. Currently the XAU is below the Alpha Trend and closed below the one-year moving average of the Alpha Trend. Additionally, the Alpha Trend is currently falling. The one-year moving average of the Alpha Trend has rolled over and is heading down. A bullish interpretation will occur if the XAU Index price remains at or above the one-year moving average of the Alpha Trend, currently at 94.23. With the XAU Index currently below the Alpha Trend resistance price of 98.85 the Index needs to close above this price to resume the next leg up for the XAU Index.

XAU WEEKLY CHART

Primary Trend Bearish

Open 92.90 High 94.67 Low 91.78 Close 93.73

Current Position Short -1.00

Alpha Trend 98.87

Upper Band 98.53

Lower Band 95.88

1yr moving average of Alpha Trend 95.33

5yr moving average of Alpha Trend 71.49

10yr moving average of Alpha Trend 84.13

Sell price 91.84

Above is a chart for XAU on a weekly basis. With XAU Index currently below both the Alpha Trend and the one-year moving average of the Alpha Trend this chart is showing a major bearish trend for the XAU Index. Additionally, both the above-mentioned moving averages have rolled over and are heading down. For the XAU Index to turn bullish the price would have to close above the one-year moving average of the Alpha Trend, currently at 95.33. The XAU Index would need to close above the Alpha Trend of 98.87 for the next major leg up in the bull market. The next support price for the XAU Index is the ten-year moving average of the Alpha Trend, currently at 84.13.

XAU MONTHLY CHART

Primary Trend BEARISH

Open 98.37 High 103.80 Low 91.78 Close 93.73

Current Position SHORT -1.0

Alpha Trend 92.73

Upper Band 107.65

Lower Band 95.23

1yr moving average of Alpha Trend 86.47

5yr moving average of Alpha Trend 67.27

10yr moving average of Alpha Trend 85.95

Sell price 92.11

Above is the monthly chart for the XAU Index. Since November 2001, the XAU has not closed below the Alpha Trend on a monthly closing basis. Since January 2002, the one-year moving average of the Alpha Trend has held and proven to be a major support line, which currently is at 86.47. A close below the Alpha Trend currently 92.73 would suggest a moderate break in the bullish case for the XAU Index. A close on a monthly basis below the one-year moving average of the Alpha Trend of 86.47 would suggest a major break in the bullish case for the XAU.

In conclusion, all three charts are showing a bearish call on the XAU Index. The XAU Index has pulled back to a major support price of the Alpha Trend and closed above it on a monthly basis. This suggests that the XAU Index has found a bottom and should resume moving back up. The XAU Index will have to move above the resistance prices noted in the daily and weekly analysis mentioned above and there will be some consolidation in those prices areas before a break out to the upside.

Next is the analysis of Newmont Mining.

NEWMONT DAILY CHART

Primary Trend BEARISH

Open 42.70 High 42.99 Low 42.24 Close 42.25

Current Position LONG 1.0

Alpha Trend 44.33

Upper Band 42.76

Lower Band 41.93

1yr moving average of Alpha Trend 42.73

5yr moving average of Alpha Trend 29.68

10yr moving average of Alpha Trend 31.62

Sell price 42.98

Above is the Daily chart for Newmont Mining (NEM). Currently Newmont appears to have bottomed and should begin moving back up. Newmont needs to close above the Alpha Trend resistance price of 44.33 to begin its next leg up.

NEWMONT WEEKLY CHART

Primary Trend BEARISH

Open 41.70 High 42.99 Low 41.41 Close 42.25

Current Position SHORT -1.0

Alpha Trend 44.47

Upper Band 44.82

Lower Band 42.90

1yr moving average of Alpha Trend 42.97

5yr moving average of Alpha Trend 28.74

10yr moving average of Alpha Trend 32.00

Sell price 41.42

Above is the weekly chart for Newmont. Currently Newmont has had difficultly staying above the Alpha Trend, presently at $44.47. Also, the Alpha Trend has turned over and has been falling for the last eight weeks. Newmont is right at the one-year moving average of the Alpha Trend of $42.97. If Newmont is unable to move above the one-year moving average of the Alpha Trend the next support price is the ten-year moving average of the Alpha Trend, currently at 32.00. The trend of Newmont is bearish and has been since December 23 2004. Currently the indications are pointing to this trend continuing, which suggest Newmont will hold around the one-year moving average of the Alpha Trend.

NEWMONT MONTHLY CHART

Primary Trend BULLISH

Open 44.5200 High 46.6400 Low 41.4100 Close 42.2500

Current Position NUETRAL 0.0

Alpha Trend 40.99

Upper Band 48.31

Lower Band 43.24

1yr moving average of Alpha Trend 36.97

5yr moving average of Alpha Trend 25.43

10yr moving average of Alpha Trend 31.92

Sell price 40.14

Above is the monthly chart for Newmont. Currently Newmont is bullish on a monthly basis. However, the price is pulling back to the Alpha Trend, which is currently at 40.99. The Alpha Trend on a monthly basis has held since August 31 2001. This is a major price support trend line. The current price of Newmont is 3.0% away from the Alpha Trend and appears to be pulling back to that support area. The next support is the one-year moving average, which is currently at 36.97.

In conclusion Newmont appears to be pulling back to $40.99 price support range at which point it should hold, then resume moving higher again. If the monthly Alpha Trend support of 40.99 were broken on a closing basis, the bullish call would change to a bearish one.

For more information on the Alpha Trend please visit alphatrendanalysis.com.

Alphatrendanalysis.com conducts an analysis every day for each and every individual stock that is a component of the NASDAQ 100, S+P 100, XAU and HUI indices. This site also analyzes the following indices, Dow Jones Industrial, S+P 100, S+P 500, NASDAQ 100, XAU, HUI and NASDAQ Composite. In addition to this, it will analyzes the 10yr bond, 30yr bond, Gold, Light Sweet Crude, Platinum, Silver, Swiss Franc, CRB Index and US Dollar Index Futures using the rolling front month.


 

Erich Soltes

Author: Erich Soltes

Erich K. Soltes
AlphaTrendAnalysis.com

A graduate of Brookfield High School in Brookfield CT and an Eagle Scout, Erich went on to graduate from SUNY Maritime College in New York City in 1988, with a BS in Marine Transportation and a minor in Economics. For the next ten years he was a Navel Reserve officer and a Merchant Marine officer. In 1998 he went to work on Wall Street obtaining his series 7, 63 and 65 licenses. He worked both as a stockbroker and a financial planner helping clients obtain their financial goals. In 2004 he was able to finally reach his goal of developing a mathematical trading model that could beat the "buy and hold" method of investing. In mid 2005 the Alpha Trend Analysis website that you see before was created.

DISCLOSURE:
Erich K. Soltes is the Owner of Alpha Trend Analysis, which contains the opinions of Erich K. Soltes, and is provided for informational purposes only. Neither Erich K. Soltes nor Alpha Trend Analysis, provide individual investment advice and will not advise you personally concerning the nature, potential, value, or of any particular stock or investment strategy. To the extent that any of the information contained in this article may be deemed investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Past results of Alpha Trend Analysis, or Erich K. Soltes are not necessarily indicative of future performance. Erich Soltes, entities that he controls, family, and associates , may have positions in securities mentioned in this article and may close them at any time.

Alpha Trend Analysis, does not represent the accuracy nor does it warranty the accuracy, completeness or timeliness of the statements made on its web site or in its email alerts. The information provided should therefore be used as a basis for continued, independent research into a security referenced in this article so that the Subscriber forms his or her own opinion regarding any investment in a security mentioned in it. The Subscriber therefore agrees that he or she alone bears complete responsibility for their own investment research and decisions. We are not and do not represent ourselves to be a registered investment adviser or advisory firm or company. You should consult a qualified financial advisor or broker before making any investment decision and to help you evaluate any information you may receive from this article.

Consequently, the Subscriber understands and agrees that by using any of Alpha Trend Analysis services, either directly or indirectly, Alpha Trend Analysis, shall not be liable to anyone for any loss, injury or damage resulting from the use of or information attained from Alpha Trend Analysis or any of its services.

Copyright © 2005 Alpha Trend Analysis

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com