Housing Index, Gold, Palladium And Platinum

By: Sol Palha | Sat, Apr 16, 2005
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"The buyer needs a hundred eyes; the seller but one." - Italian Proverb Sayings of Italian Origin

Extracted From March 29, 2005 Market Update -- charts updated.

Housing index

We have three up trend lines here; two of them have been broken and we have two negative divergence signals (bearish). This is a clear confirmation that investing in the housing market is not a good idea right now (particularly in the USA, Australia, New Zealand and most of western Europe)


We have 3 up trend lines, all of which have been broken. We also have two negative divergence signals and we also have a long channel formation after a huge run up. Channel formations are usually bullish after a huge correction and bearish after a huge run up. Platinum has been unable to break past the 880-890 levels after repeatedly trying to do so for almost 9 months.

We have a mini channel formation inside the main channel formation; once the 840 levels is taken out platinum will race to the 810 levels after which it will mount some sort of rally that will most likely fail. A break below 810 will result in platinum testing the 750-780 ranges. Platinum usually leads gold in the move up and down and its inability to mount a sustainable rally is another reason we have been so cautious in taking new positions in Gold (credit for this observation goes to John Tyler of www.trader007.com)


From Nov-Dec 2004 Gold put in new highs while during the same time period (look at the graph above Gold) Platinum actually put in a lower high; this was a huge form of inter market negative divergence; potentially this means that Platinum has a lot more downside in store before it can mount another strong significant rally.

There are no negative divergences present in the palladium chart. We have two channel formations (one is inside the larger channel formation). The 1st resistance level is in the 200 ranges and the second resistance is at the 240 levels. We broke past the 200 levels but could not hold above it, the second attempt will most likely take us past the 200 levels all the way to the 240 levels where Palladium will run into minor resistance before blasting through it. History has shown us that good plays always have a pain/aggravation and then frustration stage before suddenly exploding up. Gold, natural gas, oil, silver, nanotech, biotech's Etc all went through similar phases.

All the above charts have been provided courtesy of www.prohpetfinance.com.

"You cannot depend on your eyes when your imagination is out of focus." - Mark Twain


Sol Palha

Author: Sol Palha

Sol Palha

Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

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