Gold rallies as stocks hesitate
By Colin Twiggs
February 27th, 2013 1:00 a.m. ET (5:00 p:m AEDT)
Spot gold continued its rally, as stocks hesitate, and is likely to reach $1400/ounce before encountering strong resistance. Bullish divergence on 13-week Twiggs Momentum strengthens the signal and cross to above zero would indicate a primary up-trend. Breakout above $1400 would confirm the signal, but seems a long way off.
Interest Rates and the Dollar
The yield on ten-year Treasury Notes is testing support between 2.60 and 2.65 percent. Breach would continue the correction to primary support at 2.50 percent. Bearish divergence on 13-week Twiggs Momentum warns of weakness. Breach of 2.50 would offer a target of 2.00 percent, while recovery above 2.75 would indicate an advance to 3.50 percent* — confirmed if there is a breakout above 3.00 percent.
* Target calculation: 3.00 + ( 3.00 - 2.50 ) = 3.50
Lower yields would suggest dollar weakness. A monthly chart shows the Dollar Index ranging between 80.00 and 81.50 over the past four months. Breach of the rising trendline indicates trend weakness and a break of support at 80.00 would test primary support at 79.00. Breach of primary support, and/or a 13-week Twiggs Momentum peak below zero, would signal a primary down-trend.
* Target calculation: 81.5 + ( 81.5 - 79 ) = 84 or 79 - ( 84 - 79 ) = 74
If, then, I were asked for the most important advice I could give, that which I considered to be the most useful to the men of our century, I should simply say: in the name of God, stop a moment, cease your work, look around you.
~ Leo Tolstoy