Here is the simple HUI daily chart we used in NFTRH 380 to show the parameters of ‘bounce’ vs. ‘bull signal’. The higher high Huey is making above the December and January highs is a good thing, obviously.
Today the index has bounced right to the next parameter, which is the SMA 200. If this area does not offer resistance, all eyes on the October highs and the effort to get above, and hold above 140. If that were to happen, we will start talking about a potential intermediate trend change.
This is sort of working in reverse to the process we used to gauge and confirm a trend change in the S&P 500, and that makes sense since our view of the gold miners is counter-cyclical. The only reason I am talking so, shall we say rosy (by my standards) is because the fundamentals continue to improve, not only for the sector but on the macro. Even yield curves (ex. 10 vs. 2yr and 30 vs. 5yr) are still bouncing (but not yet trend changing).
Meanwhile, on the counter-cyclical theme durable goods, ISM non-manufacturing and ADP employment have come in soft, joining the still contracting ISM manufacturing report. So when my fundamentals look constructive, I pay attention.
Here is another consideration, gold vs. many major stock markets is having a strong week. Here is gold vs. S&P 500 as of yesterday. It looks similar in Europe and other areas as well. It is a bit higher today and very constructive as of now. A break and hold above the summer highs would set a trend change in gold vs. stock markets and deal a good blow to the confidence (by market participants) that central banks have enjoyed for years now. We shall of course watch closely.
I just wanted to bring the picture up to the minute. There is nothing above we have not already covered repeatedly. But the process is inching forward and from here on (even subject to another potential downside reaction) we should be watching closely. That is because technicals and fundamentals are getting on the same page at this time.
