Also known as members of the risk ‘off’ contingent, the gold sector and Treasury bonds are doing some interesting things today.
HUI got down to the mid-180s and is forming a potential Hammer, which would be a reversal candle (with short-term significance, at least).
We had noted the 180s as being a significant downside target and here I want to review again the monthly log scale chart we often view, for perspective. I don’t take the daily chart and it’s Hammer seriously in its own right. That is for day traders or bounce players. I do take it seriously however, when it takes place right at a key parameter we have been watching on a long-term chart. Today HUI almost touched the mid-point of the monthly Bollinger Band and that would be an important support area (currently 184 and rising) to hold if a bull case is going to remain in play. Hold it and Huey could surprise a lot of people. Fail and the target would become the December lows.
With the stock market hopped up on bullish momentum it is time to be aware that risk ‘off’ or defensive or counter-cyclical is a position as well. If risk ‘off’ were to get bid again, the miners would likely be part of that.
Here is what gold (GLD) is doing today (silver still looks relatively poor). GLD has settled to the SMA 200 and lateral support defined by the top of the pattern formed in February to April. If gold is going to keep from breaking down, this is the place to do it (SMA 200 or SMA 50).
Gold, the gold sector, some of the consumer staples type items and Treasury bonds all fit the general risk ‘off’ bill in varying ways.
Speaking of T bonds, here is what TLT is doing today. It has dropped to the lateral support that is the highs of January-March. There would be more support at the SMA 50. The contrary play on bonds is over, but it could still serve as a portfolio balance. As long as support holds I keep TLT for this reason.