“The Hook”
I have referred to Joe Granville on a couple of occasions in the past. Younger technicians probably haven’t heard of him unless they read one of his books. He was a pioneer in many aspects of technical analysis and his newsletter was a must read during the seventies and eighties. He literally moved markets with his calls. One of his technical tools that he would point out at important turning points was what he called “the hook”. It would be some important stock, market index or data point that got the investor crowd hooked in a certain direction just as the market was about to go in the opposite direction. That is exactly what NEWMONT MINING was last Monday. Being the largest gold miner with the highest profile, it was the perfect gold stock to have a toilet flush and convince as many gold stock investors as possible that gold would never rally again and even if it did, the miners were a terrible thing to own. The metals have bottomed and will be rising going forward. We don’t know yet how fast. My guess is that gold is going to trade with a lot of starts and stops for a while to keep as many investors as possible from jumping on board. Silver should continue to lead and be stronger and more persistent. NEM will probably take a while before it kicks in with one of it’s big persistent runs but that offers an almost 5% yield while waiting for it to join in.
I saw him when he was at the height of his popularity. His bathtub analogy was disproven. Water does not run out of the tub faster when it is nearly empty. Great show his books are worth the read. I miss him and other great analysts that used to appear on FNN. The crap we have nowadays CNBC pales in comparison.
I might have mentioned I saw him at Carnegie Hall in NYC in the eighties at a promotional event sponsored by IBD. He actually played the piano. Despite being a showman and a bit of a clown his technical analysis was spot on.