Gold Stocks; Rubber… Meet Road

The road, in this case, would be the HUI 195-200 level we have been projecting as key support. Below is the daily chart we’ve used in NFTRH reports and updates (we are also using weekly and monthly charts, along with a whole lot of other indicators for perspective) to first plot the bounce to 220 (the ultimate high ended up being 220.22, a whopping fraction above the target) and then to project key support. HUI is now in the process of dropping to that key support area.

Subscribers had both parameters well ahead of time. The 220 upside was projected as soon as Huey got through resistance, and that resistance was noted as key support as soon as it was exceeded. And voila… here we are. It was recommended that traders sell as the then-overbought Huey got to 220, and would-be buyers wait for the 195-200 area.

hui

But again, there is a lot more to the picture, including some seasonal work we did on gold this weekend. I’d originally thought this pullback would be a sharp, quick one to clean out the momos (oh wait, North Korea didn’t end the world or disperse us all to our little one-man Unibomber shacks?) but now I am not so sure. Nor do I need to be sure because I am hedged (directly against the miners and indirectly, long USD). Hedging was another action advised in updates and reports. We all fit different categories and mine was moderate profit taking and hedging.

I don’t want this to sound like one of those wise guy posts, where the genius touts his good calls and conveniently forgets to tout his failures. So in that case we should note that the US dollar has thus far failed to bull and oh by the way, the stock market has not cracked in the least (trends are up in all time frames, and that’s the ultimate data point). And that 2nd thing is part of the reason for caution on the gold sector now; until that pig cracks the gold sector is not indicated to be a place for peoples’ funds, at least not in any sort of priority way.

I am on record as expecting turbulence to crop up in stocks sometime between the 2nd half of September well into Q4, but Q4 is going to be a long while and again, there’s that gold seasonal to contend with. It shows weakening due around now but we also did some good work in NFTRH 465 that showed the time frame when the next buying opportunity may be. It’s out ahead, but not right around the corner.

The thing is, the HUI chart above is demanding a near-term hold of 200 +/- now. If it does not and if other indicators like the HUI/Gold ratio do not hold, I’ll not sponsor this sector. I’ll wait until the time is right, which could be in line with the seasonal for gold.

Here is a daily view of the still-intact HUI/Gold (GLD) ratio. It needs to stay that way, among other indicators.

hgr

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