My previous position on gold has been wrong. At least so far. I didn’t think it would punch through the resistance at $725 but there it is, firmly established above that level now. So take the following with a truckload of salt:
An almost perfect double top is forming on the chart. We have an uptrend where price has appreciated for a few months and then the two peaks which are about the same height. The support line is just below the current price. If it is violated a picture perfect pattern may unfold.
Something remarkably similar is going on with crude oil:
In the summer I turned bearish on the oil sector as there was a buying panic underway. Oil stocks continued to rise into July but then stumbled badly. Their low was in mid-August, along with all the other sectors out there, as I was pounding the table to go long.
Bullish percent indices are very useful in timing the market. Right now the bullish percent index for the energy sector is at 38% which is low but not too low. And for the gold sector the bullish percent is just below 50%, smack dab in the middle of nowhere.
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