Well here it is. Here is the fallout from the hype that I wished I’d have been even more strident about in February.
HUI has dropped to the SMA 200 which, before the pullback started in earnest, had seemed like a logical and key support area. It still is, with its gap fill, lateral support and tap of the SMA 200; but we have also kept the lower gap on radar as well. That one need not fill because it launched a trend change, but I would not mind getting it out of there nonetheless.
Bottom Line on HUI: Oversold, but not drastically so. At a valid level for a bottom, but the gap above 152 is open as well. A loss of 150 breaks the uptrend. Huey… hold that January low!
The HGR was taken from its stellar condition above the SMA 50 to an intact condition at the SMA 200 to a hard decline to a lower trend line (i.e. still intact in a different way). As with nominal HUI, the January low needs to hold or this indicator would be broken.
Bottom Line on the HGR: Still intact in a different way after the sector took a clubbing. Frankly, it would have been highly unusual in a correction this pronounced for HGR not to have finally given in. HGR… hold the January low!
I sold the DUST gold miner bear fund yesterday but bought back gold bear fund DGLD simply because to me, gold looks more vulnerable from this point than the miners or silver. Unless it gets neutralized with a climb above the neckline the pattern measures to around 1210. But gold has not even come near our 1st downside target, which is the SMA 200 at 1253. Pattern measurement or not, that (1253) is what I slightly lean to as the best target. But all three are noted and for those with open minds, doable.
Bottom Line on Gold: As long as it resides below 1285 there are three clear support levels open. A break above 1285 would put the bears on alert that that view is aborting.
Silver has already hit the original downside target but if gold has so much downside potential (note the word “potential” as in, it’s a possibility not a dire prediction, which we can leave to the reverse bull horns) how can silver not at least be going to 14.50?
I continue to expect silver’s CoT to mature sooner and if we have an inflationary issue out on the near horizon, lead the next precious metals rally. Given the status at support #1 and what looks like a little bear flag below the SMA 200, 14.50 is the favored target. But again, I’ll be as open minded as needed so as not to become a sponsor of hype as those calling for 1400 gold on the way to 3000 gold were in February.
Bottom Line on Silver: Main target is 14.50. It’s trending down but not very oversold, so one more drop could get that done. A rise above the SMA 200 and break of the top wedge line would change this plan to quite possibly, correction over.