We have followed the daily chart parameters all the way through the rally and HUI is hammering a key support parameter right now. Unfortunately, my status as ‘work at home dad’ has had me out of my office by 2:30 each day lately and I was not able to do any selling, which I would have done to a moderate degree at least as the sector weakened in the afternoon, given the highlighted text in the quote below.
The opening to NFTRH 484’s Precious Metals segment…
The current rally is probably a majority of the way done in both time and price. The daily chart of HUI shows an intact situation with respect to the rally from December. If the non-overbought RSI is fuel for a new leg up (as opposed to being a negative divergence) the next and perhaps final leg could be a good one (potentially to fill the gap). We should also keep in mind the downside gap, which could fill, ideally, after the upside one does. 195 is the key support level here but I don’t want to see it tested again.
Well, the 195 area is getting tested and this is not a positive. HUI holds a higher low by a hair.
Does this mean the end is here? For the rally out of mid-December, possibly. 195 (+/-) will either hold or fail. The good news is that a continued correction would fix inflationist gold bugs as the sector was rising for reasons other than the preferred ones and it was just an ‘also ran’ going with the ‘inflation trade’. We have also been noting the open gap down below 190 and it would be good to get that out of there.
This rally leg has been a seasonal thing projected for December and January. My goal will be to protect portfolio gains but also have patience about this sector, which I do believe is on course for a positive 2018. But the Amigo indicators, especially stocks vs. gold, are not yet constructive.
Anyway, without getting too wordy, HUI has dropped to a key parameter that I did not want to see tested again (with respect to the short-term rally’s health) and this is a show of weakness. A close below the SMA 200 would signal that the short-term rally is probably over. It also remains a candidate to make one more higher high. Now it’s up to Huey.