We are well past amateur hour and heading toward day’s end and the HUI (senior gold stocks) is still holding strong with today’s recovery off of the capitulation into yesterday’s close. Assuming this remains the case, the daily chart outlines some objectives for a successful trade.
The first objective would be a gap fill at around 300. The second would be the gap at 320 and the third would be the declining 50 day moving averages. Traders might realistically expect 300 and not get greedy.
Investors were probably picking off favored items at value prices yesterday and want to see the channel broken and eventually, the thick red dotted line which you may recall is the neckline to the massive topping pattern that is visible on weekly and monthly charts.
Everything has to start somewhere. Today what we have started is an upside reaction off of a really impressive capitulation. It was so dramatic that it could have ignited a new bull market. Problem is, we will not know that until much later. So traders should know they are traders and investors should know who they are.
Even if this rally is the real deal, nothing goes straight in one direction. Testing and grinding could come into play, perhaps after hitting one of the targets noted above (again, assuming today remains strong and there is follow through after today). So have patience, perspective and an understanding of who you are if you are a gold stock player.
If you have any question about the above, don’t hesitate to mail me using the contact link above or the ‘biiwii’ email address.