Update; HUI in More Detail & Alternate CoT Views

Well folks, it appears 34 pages were not enough and based on questions received from two subscribers, I thought I would do an add-on update to NFTRH 285.

HUI Gold Bugs Index

Regarding the support parameter of 225 on the downside, a subscriber asked what the downside target would be if HUI loses 225.  Well, the first objective would be the 215-218 support area that we noted was critical support to a would-be bounce.  This has worked out so far.  I do not want to see it tested again; hence 225 noted as the new support.

I suppose 215-218 could hold once again but a return to that level would imply weakness.  Recall our symmetry theme wants a modestly UP candle this week, which does not test last week’s lows.  We can get some low 220’s in-week before moving higher, but a relatively strong week through and through would be preferable.

Bear in mind this is only one non-traditional technical view.  I basically made it up, but have been with the markets long enough to see things get done in one period in time and then get undone in an inverse fashion at a later period in time.  So as long as it holds up we are going to keep it in rotation.

hui.wk

Transitioning to a 30 min. view we see that 225 fills the gap and we can allow for some in-week wiggling to 223 or so.  But strength would then need to resume shortly thereafter.

hui.30min

So hopefully this adds some technical clarity or definition to this week’s analysis of the HUI.

CoT – Another View

Yes, those bars on the graphs shown in #285 can look pretty intimidating.  We recently reviewed these bigger picture views but it is worth doing so again for perspective.

While gold has red-lined in all 3 situations (commercial net short, large and small specs net long) we should again note that the absolute values are not even close to their 2012 and 2013 extremes.

cot.au

Silver’s bigger picture view is very interesting.  Here is where my geek is showing because it is a beautiful Sunday afternoon and I should be doing other things.  Instead, I am sitting here marveling over squiggly pictures!

cot.ag

Relax your eyes and let the similarities between the recent 60% (+/-) decline and the one from 2008 come into focus.  I find it remarkable how alike the CoT structures are to the immediate aftermath of that period.

A nagging caveat is that silver has not made a higher high in price as it did in 2009.  So either the catch up move is going to be impressive, or silver is going to fail.  But a nearly identical CoT situation in 2009 led to a choppy cyclical bull market that of course finally flamed out with the 2011 hysterics.

Bottom Line

The CoT data reviewed in this week’s letter indicated that the metals are not out of the woods in the short-term.  The bigger view indicates that the precious metals could well be on a grinding beginning to a new bull market.  Silver should at least keep the modest trend line from last summer shown in #285.

HUI is cut and dry for short-term technicals and on a bigger picture road map to a bull phase or even new bull market.  The parameters are given more detail above.