Tuesday, November 25, 2014

A gold stock relative buy signal:

In an earlier post I looked at Fibonacci ratio studies as applied to gold and the gold miners – and - what you can expect when a market begins a corrective phase. The classic Fibonacci retracement percent number (%R) is 61.8% but 50% and 100% (not Fibonacci #’s) are common. A long term chart displayed gold and the gold miners rebound from the 2008 financial crisis lows to the 2011 price peaks and the subsequent correction expressed as per cent retracements.

Now I present a relative perform study - daily with the gold miners above the gold bullion ETF setting out some relative perform buy and sell signals as displayed in the lower short term spread. The calculation is the upper plot / lower plot with a 20 period smoothing. One caveat with relative studies – a relative out perform sector can still go down – but at a slower rate than the related sector – its all relative.

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