The gold sector has taken a good hit since the highs in July. That means there is fuel for a rally if the Fed rolls over as the Fed Futures overwhelmingly believe they will. But it is important not to get caught up in any one day or week’s festivities, at least not without our eyes open to a bigger picture scenario. Here is one such scenario.
We noted this morning that the daily trend is down because HUI is below the SMA 50 (which itself is turning down now). But we have also noted the propensity for volatility and emotion in any market, but especially this one.
Huey is trying to sneak out of the steep post-July downtrend line, apparently believing the Fed will remain soft or maybe it is much simpler; maybe it is just time for a bounce. Regardless, if it gets through that (black) line traders and machines will see it and if a bounce manifests, the target would be the 50 day moving average and/or the the upper (green) channel line. This is very similar to what we projected recently prior to the last bounce.
Just a little ‘what if’ picture for gold stock players to consider.