In an update on Monday we noted the following using a weekly chart of HUI…
Here is the blown up view (again, no pun intended) of weekly HUI. I have added a downtrend channel (intersecting the 110 area, +/-) for a view of where a bounce could materialize.
Here is the current daily chart showing a reversal right around 110.
What I find most interesting is that it is happening on stock market weakness, not going with or leading the stock market. This is the preferred scenario, at least in microcosm. The preferred scenario on the macrocosom (not a word, I know :-) turns out it is a word after all, and a pretty cool one at that) is an inverse relationship to the US stock market.
On the larger picture we have not proven anything out as far as macro fundamentals go because this one constructive day (assuming it holds up) will not change existing trends. So HUI may not have hit its final bottom and yet still could get a sizable bounce considering the depths of over sold readings on daily charts.
If this is not a head fake and the bounce materializes, a reasonable target could be a gap fill at 130. We will evaluate the situation in both the precious metals and the broad markets in an ongoing manner as usual to see if we can get some movement in existing trends and in macro fundamentals going forward.
