06/22/06 - Mike Swanson: GoldStocks Turn the Corner!
The last time we saw downtrends in the XAU and HUIreverse their course, both the XAU/gld and HUI/gld ratios snappedback. This was back in March after the March bottom. History is nowrepeating itself right in front of our eyes and that means we can expectto see gold stocks march higher over the next few weeks. The nextresistance point on the XAU is in the 145-155 area. We'll likely getthere sometime during July, then consolidate for a few weeks, beforebreaking out again at some point in August to launch the next big bullrun.
Yesterday's action was what I was looking for back in May. If you canremember, the XAU and HUI consolidated and began to trade in a verynarrow range. It looked like it was going to break out. Instead bothtouched their resistance points and then fell straight down. BUT, thistime we finally got the key breakout. And not only that, it has comeafter last week's bottom.
When we look back at all of this action a year from now we'll be able topoint to June the fourteenth as a key day for gold stocks. The daybefore, gold stocks and the metal closed on lows. Then on the fourteenthboth gapped up on the open. Gold then plunged around 40 points while theXAU held up and finished strong going in to the close. That was the typeof positive action you see at major bottoms for gold stocks. Knowing thatthis happened last week makes the downside very limited for getting innow or continuing to hold.
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