Colossus Minerals Inc COLUF

"Runaway Gap????"

[dannblack]

Very interesting article. The yellow highlights are mine. If this is accurate, strap yourself in, it's going to be a one hell of a wild ride. Those who have kept some powder dry & are on the correct side of this will have a grand slam opportunity. CSI & similar companies' SP gyrations could prove to be extremely interesting ........ and challenging. Being aggressive & nimble while not getting either too greedy or fearful will, as always, be will be the investors challenge. #1. Catch the wave. #2. Ride it in. #3. Avoid the rocks......dannblack
To read the entire article go to:
https://financialsense.com/fsu/editorials/bloom/2010/0525.html
The breakdown in the commodity indices is not (yet) being mirrored in the Baltic Dry Index – which measures the current level of shipping activity in dry goods. This particular index, in this analyst’s view, will be a particularly important one to watch. It dos not monitor what investors “think” might happen in the future. Rather, it monitors actual activity.
The thoughts that have been occupying this analyst’s mind (apart from day to day living) are as follows:
We have recently seen a Dow Theory Sell Signal. In context of a market that is fundamentally overvalued, this is an ominous sign following the trillions of dollars of stimulus money that has been spent by governments across the world.
Commodity Indices appear to be mirroring the anticipation of coming deflationary times
There has been increasing reference in the media to North Korea and a brewing conflict in that region. The latest article was in today’s Drudge Report, which can be seen athttps://www.msnbc.msn.com/id/37309788/ns/world_news-asiapacific/

On balance, these thoughts are not comfortable and, theoretically, should be reflected in a rising gold price.
The following is a chart of the gold price:

The pattern on this chart is, to put things bluntly, highly suspicious. In brief, there was a breakout to a new high about ten days ago followed by a pullback which gave rise to a “high pole” warning.
This kind of Point & Figure chart behaviour manifests when there has been “concerted” selling following “concerted” buying and the question arises: In context of the Primary Trend sell signal in terms of Dow Theory and in context of the falling commodities, what caused this concerted selling pressure in gold? At this stage the evidence is circumstantial, but we need to keep an eagle eye on things. If gold is a “commodity” then the reason for the fall is understandable. (The price was falling because of sell signals being given in other commodities). However, if gold is a “safe haven” then that selling activity might have been contrived. The charts will eventually reveal their secrets.
But there is one way of checking. We can objectively examine whether the markets are viewing gold as a commodity or as a safe haven. The chart below (also courtesy stockcharts.com) is of the gold price divided by the Commodities Index.

Note the upside gap that manifested at the 4.25 level four weeks ago. More importantly, note that it occurred at a point where the ratio broke up above its falling trend line. Perhaps even more importantly, whilst the last time this happened was at point A, and that gap was “covered” as the ratio subsequently pulled back, this particular gap was to a level above the third trend line of a three line fan formation. In technical analysis, such an event must be regarded as highly significant. In short, there is a strong possibility that this breakout was a “breakaway” gap. If it was, then it very possible that this breakaway gap will e followed by what is known as a “runaway” gap that will manifest as the ratio jumps above the double top level. Breakaway gaps and runaway gaps are typically not covered for a long time, if at all. The reason for this is that they manifest when there is a sudden sea change in sentiment – in this particular case, the sea change will likely be accompanied by fear (panic) as opposed to optimism.
Conclusion
Despite evidence that the world economy has in fact been recovering, the technical evidence now suggests that this recovery may have been merely ephemeral. If – after several trillions of dollars have been “thrown” at the various world markets by governments attempting to stimulate a growth in underlying economic activity – the markets now turn down, this down turn will likely be accompanied by panic. Indeed, the charts are showing strong signs of the possibility of an emerging panic. To put a precise timing on this is not possible. However, based on the weekly charts, it might occur at any time within the next few weeks.
Caveat
Clearly, the combined weight of all the potent world governments will be thrown at the markets in an attempt to prevent this sea change in sentiment. If, under such circumstances, the ratio of the gold price/commodities index fails to break to new heights and pulls back significantly, this will indicate that such actions have been (temporarily) successful.
Copyright © 2010 Brian Bloom
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