FYI | Apr 20 2006
Sometimes you have to throw in your gut feel. The better your gut, the better your decisions. Charles Knights sometimes throws in his gut when technical analysis is not 100% clear about what to think of this of that.
Some readers may know Charles Knights as Shaw Stockbroking’s Private Clients adviser who sometimes shares his insights and opinions with the rest of us through the broker’s egoli website.
Today Charles threw in his gut, because the charts are not 100% clear on the direction of the Dow Jones. He believes the index (it’s not an index, it’s an average, but let’s not get there now) has currently moved back up into what Charles calls "the extension of the Make Or Break (M O B) resistance".
What this means is that the index (average!) will have to close above the recent high of 11,334 to maintain its upward trend. Possible moves from that to the upside are based on the (current) wave 4 to 5 being 11,450 and possibly 11,560, says Charles.
However, and this is obviously the sentence you all have been waiting for, the current market volatility makes it hard to gauge which way to jump, Charles believes. So he decided to listen to his gut, which resulted in Charles concluding "this market is at best going sideways to down". (That’s what his gut tells him).
It is interesting to see that the local equities market decided not to follow Wall Street’s lead today and closed slightly weaker.
Charles Knights made a few interesting comments on the AUD and gold bullion as well.
As the AUD is back at around US$0.7475 he says he has "targets" for the currency in the short term of 0.7560 and 0.7687. The first target happens to be "coincidently" also in a resistance M O B (Make Or Break) zone and the second should require some more time (that’s Charles’ gut speaking again).
Obviously, all this is merely a result of US dollar weakness rather than Aussie dollar strength, although one has to note the obvious support from ever rising commodities prices.
As far as gold is concerned, Charles joins a row of other specialists stating there’s not much in front of the metal in terms of precedents or recent history. He says he had to take his analysis back in time to 1987 for what he describes as "the next relevant pivot point" needed to try and gauge the next M O B (Make Or Break) level.
This allowed him to come up with a zone in between US$638 and US$666/oz. Last night the gold contract closed at US$632.60/oz.