Gold Stock Thoughts 061907

The XAU - PHLX Gold and Silver Sector Index has been range-bound for a little over the past month. Support has held below the 135 range, and stocks have stalled above XAU 140. The index has touched resistance three times now, and is attempting to hold the flat 50 day moving average at 139.65.

I bought a few gold stocks here at XAU 139-140 with a stop below XAU 138.89 roughly. Target 145 XAU. AEM, MDG, and GDX look decent. PAAS and SSRI are two stocks in the silver sector that usually move well for me. I’ll consider adding if XAU 141.7 is taken out.

As I’m writing this, XAU is ramping. You’ll notice that the XAU 5-minute actually makes a lower low, which would be considered bearish. My thought is that stops were taken, and the bulls had enough firepower to move back above pivot 2. A stop below the 138.89 protects me if I’m wrong.