Earlier we noted 275 (a 50% Fib retrace of the rally) as the lower tolerance of the ‘normal’ zone on today’s pullback. If HUI finishes the day as it currently stands, the pullback is a normal reaction or shakeout. We could say that the 62% retrace at 270 is normal too, but how far is a trader going to stretch normal? 275 is my personal limit on normalcy.
I would not be surprised to see a quick downside lurch (to 270 or so?) on Monday. Then it would be time to gauge whether a reversal is in the cards or a rally failure.
Regardless, I am in a mode where the sector must prove itself to me. So I remain under committed pending Monday. Others should use the above as a potential short-term road map and do what feels right.
