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Sunday, June 9, 2013

COT and Technical Review of Gold Following Galileo's Concept of Inertia

Gold diffusion index (DI), currently at 79%, is rising sharply again (chart 1). This suggests growing concentration within the trend.  A concentrated trend (DI readings above and below +/-60%) like a boat with uneven weight distribution, infers instability and increases the probability that price will change direction unexpectedly.

General Observations.

  • 100% is maximum bullish concentration
  • 0% is maximum bearish concentration
  • Gold diffusion reached 97% on 11/11/2008.  This was the highest DI reading of 2001 bull run.

Chart 1: Gold London P.M Fixed and Gold Diffusion Index (DI)

Additional Comments:


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