Recovery "close to faltering", Fed could act
CIGA Eric

The Fed will act again. Bernanke appears to be listening to the message of the market. A growing list of negative divergences of key intermarket relationships relative to equity prices, new lows unconfirmed by stock prices, illustrates decaying global economic growth.

Copper to Aluminum Ratio:
^[1]

Chicago Fed Economic Activity Index:
^[2]

Bill Gross said it best, recession risk overtaking new normal. ^[3] I agree.

Anyone that believes the Fed’s response will be anything but QE to infinity because gold and the gold shares continue to get pounded, simply fail to recognize the role paper operations, often referred to as open interest flushes ^[4], play in trend control.

Headline: Recovery "close to faltering", Fed could act

(Reuters) – The Federal Reserve is prepared to take further steps to help an economic recovery that is "close to faltering", Fed Chairman Ben Bernanke said on Tuesday.

Citing anemic employment, depressed confidence and financial risks from Europe, Bernanke urged lawmakers not to cut spending too quickly in the short term even as they grapple with trimming the long-run budget deficit.

He also made clear the Fed — the U.S. central bank — stands ready to ease monetary conditions further following its launch of a new stimulus measure in September.

Source: reuters.com ^[5]

More… ^[6]

Dear Jim,

Feel free to comment & share with other CIGA’s: http://profitimes.com/free-articles/goldstocks-bottom ^[7]

Kind regards,

CIGA Willem Weytjens
www.profitimes.com ^[8]

Earlier today, the markets tanked on Europe concerns. Gold & Gold Stocks were not spared.

While everybody is in panic mode, it’s time to look at some interesting charts.

Let’s start of with the HUI index:
* The RSI reached oversold levels
* Price retested the breakout line that has been in place for the last 3.5 years
* MACD is very oversold

^[9]

The GDX (Market Vectors Gold Miners ETF) is showing a similar picture:

^[10]

Although GDXJ (Market Vectors Junior Gold Miners ETF) does not exist long enough, it also penetrated it’s breakout zone.
* The RSI is very oversold
* Price has reached the target of the Head & Shoulders pattern on the Logarithmic chart
* MACD is very oversold

^[11]

When measured in gold, CDNX, a list of Resource Exploration companies (and some Tech Companies), is as cheap as it was at the bottom in 2008:

^[12]

In short, I think mining stocks are at (or very close to) rock bottom levels.

Let’s have a look at Gold:

During the last 11 years of this Bull market, gold has often corrected.
As we can see in the chart below, most of the times, the correction was halted by the 35 weeks Exponential Moving Average.
So far, this 35EMA has stopped the correction as well, and the RSI is hoovering around 50 on a weekly basis, which is still a bullish sign. I have highlighted previous buying opportunities with a green circle. Will this time be any different?

^[13]

Charts above courtesy stockcharts.com ^[14]

The chart below is an update of the comparison I made a couple of weeks ago between the Gold Price NOW versus the Gold Price in 1979. The pattern is also suggesting that we could be close to or at a bottom:

^[15]

So sit tight and be right.

For more updates and analyses, visit Profitimes.com ^[8]!