AEM – Jan 12, 2009

charts courtesy of stockcharts.com

Boy, did some gold diggers have a rough time today or what?

In a Friday post, I said:

I think we are at, or slightly past a top, but I may change my mind on Monday. Also, I cannot say how big a top.

I was right about the top, I did not change my mind today, which is Monday, and I still cannot say how big a top it is

Let’s look at some charts

AEM dropped 7.7% on good volume. Stock just sold all day long, one could just walk to a computer, short it and make money.



Goldcorp, which has been pointedly weak these past few days, dropped 7.9+% on good volume.

Note that on both charts, which I have repeatedly posted, I have noted a strong support area (GG around 25, and AEM around 45) and those were the areas of the close of this miserable day.

Other gold diggers had a rough go of it as well

KGC: -5.7%

ABX: -5.3%

NEM: -3%

The ETF GLD dropped 3.7% and broke below an area of support

I have already read one article discussing manipulation and Comex conspiracy of paper gold versus physical gold - stuff like that. If this selling contuse, we will most probably hear a lot of that

But will the selling continue?

Frankly, I don’t know. All charts I have looked at have daily sell signals and until those signals are reversed, I would not want to risk the long side regardless of what inflationists and hyper-inflationists say

This 60-minute chart of AEM still has both bullish and bearish counts open

With Goldcorp, on the other hand, I cannot easily see any bullish count

But that does not mean that Primary B is for sure in. What I am counting as Primary B, may be major A, implying another high

The picture is as mixed as it was on Friday. We should just follow the technicals at this point and see how the stocks react, and if they bounce, We need to see how they bounce, almost all are getting oversold on short frames, some, like GG, are getting oversold on daily charts.

I still think we have seen a good top. If I am right we should see at least 50-62% retracement from a number of gold stocks before a bounce comes. Also, we should see at least some gold stocks, and their ETF (GDX) leading the metal on the way down, otherwise, this may prove to be just a correction.