XGD daily
XGD has reached levels that usually produce at least some kind of a bottom. The 200 mav has been breached, the 61.8% Fibo has been reached, it is testing the break out level from above, it is at the lower boundary of the down trend channel and the bottom of the Bollinger bands channel, RSI is touching 30, rPrice going negative and ADX reaching 40. Every single one of these events is a buying point. Combined with the 3 months of relentless selling it seems to me that we are reaching some sort of a medium term bottom. Considering the SKI bull signal and the strength of the initial rally I sure didn't expect that the correction is going to be so deep but nothing is broken yet in the big picture, not even the SKI buy.
XGD weekly
Lets look at the big picture more closely. Similarly to the USERX chart the XGD chart looks like one giant, 8 years wide, sauce pan. The difference is that the USERX chart is much shallower and it needs some working to do before it finishes the right side of the pattern. The XGD has finished the right side and in the process reached the levels of the 2011 and exceeded them. It seems like this 3 month correction was exactly what was needed to set up the next leg up. I wouldn't exclude a possibility to go down all the way to 200 mav but not before some medium term rally. If we keep assuming that the XGD is leading I would expect that USERX should find a support couple of weeks after the XGD finds it and then aim for 2011 highs too. By that time the XGD should be in a blue sky territory.
XGD SKI as of Monday morning. We had an up day
Lets see what happens tonight in the USA.
Good luck,
Branko
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