Whats Up With Gold?

By: Robert McHugh | Sat, Jul 1, 2006
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Gold finished the Micro degree wave 1 up within an extending Minuette v up on May 12th at $730.40. The correction since is a Submicro degree zigzag {a}-down, {b}-up, {c}-down, with all waves looking complete. Gold is rallying into its Micro 3 up of v. An alternate labeling is we just completed minor wave a down, and b up is close to topping at Friday's 616 level. Next would be a final wave c down to wave intermediate 2 down. Unless Gold drops below $450, the top wave count labeling holds up. Where it breaks down is if the correction underway drops below the Minor degree wave 3 top from December 2004.

In that case, the labeling would change to consider the May 12th top as the top of Intermediate degree wave 1 that started back in August of 1999, and the correction underway as Intermediate 2 down, a large degree correction. We do not see that happening in this monetary inflating environment.

The HUI Amex Gold Bugs Index continued its winning ways, rising another 8.64 points, or 2.6 percent, to 337.18. Volume was strong at 117 percent of its 10 day average with all issues advancing. Both key trend-finder indicators remain on "buy" signals Friday. The HUI 30 day Stochastic Fast comes in at 94.44, far above the Slow at 32.72, and remains on its "buy" signal from June 23rd. The HUI Purchasing Power Indicator rose to a new rally high of 192.11, remaining on its "buy" from June 15th. Since our proprietary HUI Purchasing Power Indicator triggered a "buy" on June 15th, the HUI has risen 13.3 percent.

The HUI Amex Gold Bugs Index appears to have finished an a-down, b-up, c-down Intermediate degree wave 2 correction of the recent wave 1 run-up. Or alternately, the first and second sub-waves, Minuette i-down and ii-up of c-down have completed. Because we just got new "buy" signals, we believe c of 2 down finished on June 13th at 270.54, and Intermediate 3 up has started. There is a Bear Flag pattern with a downside target of 230ish, which would come into play with the alternate labeling.

"And Jesus said to Him, "And whatever you ask in My name,
that will I do, that the Father may be glorified in the Son.
If you ask Me anything in My name, I will do it."

John 14:9, 13, 14

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Robert McHugh

Author: Robert McHugh

Robert D. McHugh, Jr. Ph.D.
Main Line Investors, Inc.

Robert McHugh

Robert McHugh Ph.D. is President and CEO of Main Line Investors, Inc., a registered investment advisor in the Commonwealth of Pennsylvania, and can be reached at www.technicalindicatorindex.com. The statements, opinions and analyses presented in this newsletter are provided as a general information and education service only. Opinions, estimates and probabilities expressed herein constitute the judgment of the author as of the date indicated and are subject to change without notice. Nothing contained in this newsletter is intended to be, nor shall it be construed as, investment advice, nor is it to be relied upon in making any investment or other decision. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. Neither Main Line Investors, Inc. nor Robert D. McHugh, Jr., Ph.D. Editor shall be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided.

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