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Daily Digger - Wednesday March 23, '05


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Metals and miners look like crap huh? Gold is not as Dover Sole as this but if we get a panic down opening or really any move lower the next few days you have to be a buyer for at least an Dover Sole bounce. Bot NG near the lows today. Although it overshot my target by 3 cents the risk parameters are very tight. Most bugz are either too shocked to sell or buy or are getting bearish. Silver is Dover Sole and due some kind of bounce. We don't turn from HUI 200 region and this gets very ugly. I think it is worthy of a shot with very tight stops. At any rate the bottom we make either around here or in the next couple of months will be the launch pad.

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XAU:

 

I'll be away on a ski trip for the next week.

 

I'll see you next Thursday.

 

Intra Day chart:

 

I was surprised that XAU continued its descent Wednesday. After a 3rd wave micro extension, I was surprised to see a 5th wave micro extension. Usually, 5th's are short when 3's extend. Of course, the rules don't always apply intra-day.

 

I'm looking for the completion of wave 3. There should be a bounce to 4 and a final decline in 5.

 

The 61.8% correction of the February 8th rally is 93.79. We're just above it.

 

There is no evidence of waves 4 or 5. Thus, any impulsive action from here must be respected. We should get nore more than an overlapping, coorection if it's wave 4.

 

Daily Chart:

 

I've labelled the rally from February 8th as a correction. There's an impulse, a 3 wave rising zig zag, and an impulse. Recent overlap of "A" means it can't be wave 1. The action since the March high fits an impulse very well. If it is, waves 4 and 5 should take it below the Fib 93.79 level.

 

This should assure an ultimate retracement to the February lows, while a correction and a further impulse down play out.

 

Again, be on guard for any impulsive action upwards. There are only 3 waves on the daily chart. Impulsive action up, from this level, means we've had one nasty abc that corrected the February 8th rally.

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SSRI in the gap. Seemed like some volume came in on the buy side so I went ahead and got some at 12.02.

 

Trin:

 

It looks like a very good short term trade.

 

SSRI is always on my watch list.

 

Trend and stochastics show very clear patterns that wave c of a 3 wave pattern is in force. In a third wave, there is usually no divergence. And there is none.

 

So Fib levels may help. Wave 3 or C is 161.8% of A at 12.07. So we're smack on a fib zone.

 

What to watch for is the rally from here--and dammit it's due. If it's wave 4, that was a great short term trade and one that you should not fall in love with. If we bounce very strongly, you've caught a bottom and all my props to 'ya.

 

Either way, excellent spotting of a setup and excellent T.A.

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Definately not an easy trade. I've heard SSRI refered to as a call option on silver, and silver doesn't look like its bottomed based on some of the indicators I look at. I traded out of it from lower with a decent profit and this is one of those I want to hold longer-term, this just looked like a decent entry point to get back in.

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Low risk long. Long NG yesterday from 8.17. 50% retrace of the move from 6.40-9.40 hit yesterday at 8.12. Next stop 7.25 area. Now looking for HUI 200 to hold for the short term for a rally back into the 215 area. Should see resistance Gold 430 and Silver 7.20. Not looking for much volume on the upside here in the miners. DROOY looks like it may outperform in the short term. Buy is around .93 if we can get there. Target high of capitulation day around 1.40.

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