11 replies to this topic

[SilentOne]

For the novice ... Fibonacci Numbers and the Golden Section

I'll let the charts do the talking. When I peruse these charts, I know the May 11th high was it for now. I'm not saying the bull is over, but a healthy pullback is underway, like an eventual 35% drop to about HUI 250 - 260. For the bull to continue, we would need to find trendline support off the May 2005 lows. If not, then things become very questionable. Do I know what is going to happen when we get there? No, but I am VERY certain HUI 260 (breakout level) will be visited.

We probably started a bounce Friday which should be traded and gives one a chance to trim any outstanding long term positions. Emotionally, it is best to be buying the coming trendline support rather than holding into it. Because if it fails in any major way, it won't be pretty.

In this sector one needs to use good money management. For novices, you have been warned. And what about buy & hold? I have been there and done that. In the right stock, it works great, but you have to have the right stock. If you don't, you can lose big.

Good luck.

cheers,

john

P.S. I have been watching these fibs for about 2 years now.

Edited by SilentOne, 20 May 2006 - 11:36 AM.

[no_mind]

SilentOne, Thanks so much for the charts. Best, Tom

[johngeorge]

john Those charts are keepers and going into my gold folder. Thank you for taking the time and making the effort. Big thanks also for always sharing. Best to you.

[cedartree]

John, That is a very interesting study. Thanks for posting it. I am looking forward to the 377 rise in the HUI. Would anyone like to predict when the HUI will overtake the NAZ? My guess is that it may not because big inflation will inflate the NAZ also. And maybe the NAZ will add some goldies to the index to soup up its performance. That will be the day... -Brian

[dougie]

thanks Silent: beautiful work. one question: when would you know you were wrong about that test? dangererous to be too certain about anyting isnt it?

[SilentOne]

dougie,

one question: when would you know you were wrong about that test? dangerous to be too certain about anyting isnt it?

It will be pretty straightforward. When we get to the HUI 260 level (and we will), the sector has to be showing signs of a bottom forming. Now given that we have been hard up in the last year (236 HUI points), it will take time for this correction to end. It can't end in a matter of days, more like months. So the first test will be that visit to 260 and we should see a very good bounce. If we don't, then I will become very concerned.

cheers,

john

[dougie]

nothing would change your mind on the 260 target then?

[SilentOne]

dougie, It looks like we are just completing wave "A" here down of about 95 HUI points. That matches with the "89" fib and puts in a first good leg down. We bounce now and will eventually test that trendline I drew at about HUI 260. A 144 point decline in total give or take is very likely. How long will it take is the question. And let's hope the trendline holds. cheers, john PS I am long this morning gold ETFs XGD.TO and the new GDX, as well as NEM. For a trade.

Edited by SilentOne, 22 May 2006 - 01:37 PM.

[sluzbenik1]

Just stumbled on this post - thanks. Never seen someone just counting points...Surprising. Why a 144 point decline exactly? My cycle works says weakness into August at least. What happens after depends on longer cycles, which are much more difficult to interpret.

[SilentOne]

Hi S! If you look at the fib expansion progression, each major rise to a fib number corrects back to the next smaller fib. Thus, the 89 fib point (actually 95) rise in 2002 was corrected by a 54 point decline thereafter. The 144 point fib point (actually 146) rise in 2003 was corrected by an 89 fib point correction (actually 95 points) and the 233 fib point rise in 2005-2006 should now be corrected at a minimum by a 144 point fib decline. I thought the progression was clear, but maybe I should have illustrated the concept better. cheers, john

Edited by SilentOne, 24 May 2006 - 03:06 PM.