Favoring a short term bounce in XAU

The XAU has declined about 7% since it peaked last Tuesday at 156 and is currently indicated at about the 145 level. All 16 stocks within the index are setting new weekly lows and although this by itself does not necessarily indicate a reversal is at hand,historical data strongly favors at least a short term bounce into tomorrow's session. Since 6/2005 using the current constituents, on days when at least 15 of the 16 stocks are making new weekly lows, the average high print on the XAU on the next day is 2.5% above that day's closing price. On the 55 days that this has happened, the index traded higher on 48 of those occasions (87% prob of at least breaking even). On the best occurrence the return was 7.4% and on the worst day the high print was 0.7% below today's close. (Note: this is tomorrow's high to today's close, NOT close to close) The odds look fairly compelling for a very short term (day) trade at these levels, but beware that it does not say much about any timeframe longer than intraday, as the average close to close return for tomorrow is actually slightly negative at 0.22%.

See chart for historical distribution of XAU's next day high to today's close after at least 15 stocks in index making simultaneous weekly lows: