Gold Stocks; a Hell of a Buying Opportunity?

HUI had a best ‘bounce’ target of 250 to 265 (if this was to be only a bounce as originally projected) as we anticipated a positive reaction at the 220 support area.  220 was not ‘best’ support, however, and now it looks like Huey can drop to the ‘best’ support as noted in NFTRH 411…

“The precious metals took a good hit to the next notable support area. For example, HUI dropped to support #2 on the weekly chart on page 19. From there a bounce was projected and it occurred. If that was the correction HUI will get through 265-270 and be on its way to the 300’s. But the best, most notable support is 200 (+/-) on HUI. That is where the weekly EMA 55 and visual resistance meet up with the daily and the SMA 200, not to mention another gap.”

Below is a daily chart, but understand that you can’t just go by some dope with a chart.  You have to cross reference different technical time frames, macro fundamentals and considerations and of course, sentiment.  So I don’t target the SMA 200 (192 and rising) only because of this chart.  There have got to be other reference points to make sensible narratives (or at least as sensible as they can be in this market, featuring US and global policy makers and media front and center 24/7, 365).  Or, as the dope also noted in NFTRH 411…

“Again, a technical analyst talking about a “need” to test the SMA 200 is just a TA being a robot. There are no absolutes, anywhere in this market. I think the odds – for whatever coming reasons – are pretty good it can happen but I am going to take this week by week, just like a TA robot, calling what I see. But I am sure going to add in the macro funda view every step of the way. This is not about one dope’s ability to think he can predict the future. It is about doing the work of getting it right. That only comes from incoming data points and the interpretation of them without interference from bias.”

hui daily chart

As for sentiment, #411 also noted…

“Regardless, the bearish phase makes me more bullish on the sector; and that includes the prospect of new lows ahead. What we want to see now is a fundamental picture that continues to hold up and improve, along with anxious, hand wringing gold bugs.”

I have nothing to add to that.  When gold bugs are out front, touting ideology to the world they are actually showing hubris and belying the unhealthy momentum that only this sector can whip up.  I have swing traded it for all too long and now, if we can get the right level of pain and angst as the gold bug herd eventually seeks to behead its leaders, we just might get a hell of a buying opportunity for longer holding of larger positions.  But first you have to have been prepared for it, which is why I have been talking for weeks now about us all understanding who we are; investors, traders or what have you.  In the notes segment of #411 I went on my own thought exercise and concluded…

“So I have not yet decided what is right for me at this juncture. But the reason I am going on this ramble is to maybe inspire a few others to have a similar dialogue with themselves ahead of time. Just like the time to sell (if you have decided you are a trader) is ahead of the big downside, the time to buy (if you have decided you are an investor who is fundamentally engaged) is on the big downside. That is also known as buying gold bug angst as I often call it but is probably more accurately momentum players puking and black boxes stopping out.”

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