This is the question some gold and silver stock traders are now asking. Has the XAU index topped, short-term? Or is there some more life left in its uptrend?

There is no way to answer this question with absolute certainty as to whether or not a high has been seen for this year. However, one observation that can be made right now is that the upside momentum that has propelled the XAU up to the 110-111 area this fall is still alive and should keep the index from declining much further in the immediate-term. Moreover, a re-test of 110-111 is a strong possibility this month as the historically strong November-December season nears its end.

Take a look at the above daily chart of the XAU. Note the still-positive configuration of its 30/60/90-day moving averages, the prime momentum and short-term trend indicators. Not even the 30-day MA has been violated yet during the past several days that the XAU has pulled back from its previous high. There should be strong underlying support around the 105-106 area in the next few days as XAU attempts to build a base of support from which to re-test 110-111. The 60-day MA is the key trend indicator and is showing the dominant short-term uptrend to still be intact, notwithstanding the weakness from recent days. This is why I'm confident that at least the 110 area will be re-tested if nothing else this month.

There are a couple of concerns, however. For one, the XAU index is starting to show a bit of relative weakness compared to the broad market. As the S&P has made a new high for the year and has made higher highs in the past month, the XAU has made slightly lower lows and hasn't broken out yet above its November high. Another concern is Newmont Mining (NEM), the leading blue chip gold that has recently closed two days below its 30-day moving average. I'll have more to say on this situation next time.

Meanwhile, the Amex Oil Index (XOI) looks to have a bit more upside potential early in the month, but appears to be in the process of topping, short-term. XOI is about to send another "channel buster" reversal signal -- a sign of exhaustion in the short-term trend.