NYSE ARCA GOLD BUGS INDEX
Every week Tech Charts Global Equity Markets report features some of the well-defined, mature classical chart patterns under a lengthy watchlist and the chart pattern breakout signals that took place during that week. Global Equity Markets report covers single stocks from developed and emerging markets, ETF’s and global equity indices. The report starts with a review section that highlights the important chart developments on global equity benchmarks. This blog post features one of several great chart analysis from the latest Global Equity Markets report.
The XAU is a capitalization-weighted index of thirty precious metal mining companies that has been traded on the Philadelphia Stock Exchange since 1983. As its name suggests it includes both gold and silver mining companies. In order to track gold and silver mining companies performance in an index there are several options available for investors, but the two most watched indices are: the NYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks) Index (called the HUI Index) and Philadelphia Gold and Silver Index (called the XAU Index). Below charts feature the Philadelphia Gold and Silver Index and the NYSE Arca Gold BUGS Index.
The Philadelphia Gold and Silver Index has been in a sideways consolidation over the past 10 months. The index is possibly forming a symmetrical triangle that can act as a bearish continuation chart pattern. Several bearish chart setups in the junior silver mining companies completed in the past few weeks. The lower boundary of the 10 month-long symmetrical triangle stands at 80.3 levels. The index continues to hold at the lower boundary of the possible symmetrical triangle. I will monitor the strong support at 80.3 in the following weeks. A breakdown of the multi-month consolidation can result in a downward trend on the XAU index. Failure to break down the lower boundary can result in another short-term rebound towards 92.5 levels.
The daily chart on the NYSE ARCA Gold BUGS Index has been in a downtrend for the past quarter. Price chart formed a short-term flag at the lower boundary of the longer-term sideways consolidation. Breakdown of the possible flag can confirm the short-term chart pattern as a bearish continuation and suggest lower prices in the coming weeks. Gold and Silver mining equities are showing weakness.
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