The breakthrough has been long awaited and,
while it is only just through the barrier, it is better to err on the positive
side as the price can move very quickly and you may be left behind in the gold
rush.
On September 15, I wrote in this column that, when markets were in turmoil
and uncertainty reigned, gold strikes. "The last few weeks have seen the
markets fraught with uncertainty and the gold price has edged up to test old
barriers," I wrote then.
"The price has been oscillating underneath the $US330 barrier since June,
pulling back to seek support around $300."
The September analysis remains valid and if a break through $330 can be
achieved, then the price could rise quickly to $350 and even $375-$380, where
there are more barriers. Such an action could fire our gold sector, so keep
watching Bendigo Mining, Equigold and Lihir Gold, Lion Selection group and
Newcrest Mining.
The risk would be yet another failure from the $330 area, returning the price
to support.
High risk
The All Ords remains vulnerable as it kicks back in its most
recent downturn. When the index fell to 2932 on December 11, it pushed into the
2920-2940 support area, locating a parallel of support. There has been a brief
bounce, but this needs to be sustained through 3020 and then 3060 to promote a
recovery. The risk remains high as the index hovers above the 2920 support. As
the indicators are not registering clear signals, watch these levels closely for
the trigger. The gold price rise on Thursday may give the market the boost it
needs to maintain its position and rally.
Recycling boost
Two stages in a basing pattern have been completed this year
on the Simsmetal chart. The first stage was completed with the rise through
$6.20 in February and the second, through $7.30 this month, suggests significant
upward potential for the stock with targets towards $8.20 and $8.80. The
progress may slow near these targets as the price faces resistance. As momentum
is regained, the upward potential may extend beyond its previous peak. The risk
would be triggered on a drop through $6.80 towards the more critical $6-$6.20
support.
Emphasising gold
The share price for Westgold has been in a down trend from
1994. The volatility experienced during the past few years suggests a change in
trend could be attempted. A basing pattern has been in progress since late 1997
and is still developing. For it to be successful, the price needs to clear 18¢.
This would complete the base and break the downward path. An initial target
would be around 27¢, then potentially higher to 40¢-45¢. The risk would be a
drop below 8.5¢.
Supermarket property
Macquarie Countrywide rose significantly in the late
1990s. The trend was steep and the price pulled back during 2000-2001 to
consolidate, lowering the upward path gradient. The price has since shot to new
highs at $1.74 last June. In reaction, a minor pullback/consolidation developed
between $1.53 and $1.74, stretching higher towards $1.76-$1.78. A break through
$1.80 would trigger the next stage towards $2 and possibly $2.25. The risk would
be a drop through $1.50.
Regina Meani is the author of Charting (Wrightbooks). The views expressed are those of the writer alone and investors should seek independent advice.
