Featured is the XAU index of mining stocks. The green arrow points to an impressive upside breakout through the red two month old resistance line. The blue arrows point to 'upside reversals', sometimes called 'climaxes'. It is quite obvious, by observing past performance after one of these UR's that odds are very good we will see at a minimum, two weeks of positive action. The XAU index has moved back up above the 200DMA (red line on chart), while the 50DMA is in positive alignment to the 200DMA. All of this is bullish action.
Most analysts look for an up-trend in the mining stocks before they become bullish on the metals, here is the first such signal in the past two months. 'It's the REAL THING!'
Whenever bullish fundamentals harmonize with positive chart patterns, the trading traffic becomes 'one way'.
In gold trading, the net commercial short position as of May 22 shows 124,000 net short positions, compared to 173,000 two weeks earlier. Such a large drawdown is a positive factor for the metals. The COT report due out later today (Friday June 1), may show an even lower number, and if so will add icing to the cake.
A note to those of you who still follow the Elliott wave guru's. Elliott waves work best in retrospect. Somewhat like looking in a rear view mirror. One very prominent guru for the longest time kept warning us that gold was going to $250 before it would go up.
Recently another Elliott-Wave student called for gold to drop to $500/oz. With numerous metals like nickel, moly, copper, lead, zinc, uranium as well as oil and gas all in multi-year up-trends, don't you wonder: What are these guys smoking?