Richard The Gold Bull RussellGLD (a proxy for gold) is looking better. Following the low at the 73 box, GLD rallied to the 90 box, backed off to 84, the headed up to the 89 box. A rally to the 91 box would be bullish and would leave the low at 73 behind.
GDX, gold shares, is looking even better. At the 37 box, GDX has risen above its preceding column of Xs and thereby given a minor bullish signal, but any bullish signal is better than none. The next upside target for GDX is the 51 box.
Note -- the upside P&F projection for GLD is 125. The upside P&F projection for GDX is 51.
Below is a chart of actual gold. The green column of Xs has recouped almost all of the preceding down-column of Os, and that's bullish action. A rise in spot gold to the 930 box would represent a massive bullish breakout with the P&F projection to $1300. All three charts are now constructive or outright bullish. The decline to the 740 box is what I call a bullish "tail," when they are reversed with the action reflected by the tail taking out a large number of hopefuls. Typically, when the tail is reversed, the item can move up strongly without a lot of previous holders. There's no doubt that the decline in gold to 740 knocked a lot of Johnnie-come-latelies and even believers out of gold. Thus, the air is cleared for higher prices.
Richard Russell
Editor-in-chief - DOW THEORY LETTERS
http://ww2.dowtheoryletters.com
September 25, 2008
The inimitable and venerable Mr. Russell gained wide recognition via a series of over 30 Dow Theory and technical articles that he wrote for Barron's during the late-'50s through the '90s. Through Barron's and via word of mouth, he gained a wide following. Russell was the first (in 1960) to recommend gold stocks. He called the top of the 1949-'66 bull market. And almost to the day he called the bottom of the great 1972-'74 bear market, and the beginning of the great bull market which started in December 1974.
