First off, I could be wrong here. That big drop to start the day, huge in-day ramp job and then partial decline back down in the last half hour felt onerous to me. Maybe the extreme volatility signals a market getting ready to take off. Who really knows? But I don’t like that it came about off of the deplorably bearish sentiment and may have tempted some people to chase or call the lows in. It felt like a sucker rally because it’s still below two resistance levels after briefly crossing above one of them.
But it does not matter how things felt to one human. What I care about is how it left the chart and using HUI weekly it left the chart below resistance at around 180 (late last summer the support parameter we were looking to have tested). In the trade log on 3/17 we used a daily chart to note that resistance at 200 to 215 was likely to resist, and produce turbulence. Check and check.
That resistance is represented here on the weekly chart and while the test of resistance and pullback or grind was expected, the volatility has been incredible. Okay, that is fine. But I don’t like the close today back below the lower resistance level. Well, I do like it because I am a buyer in waiting, but you get my drift. That felt like a play today. Big ramp and close back below resistance. I guess we’ll see tomorrow, which is actually good because the weekly close is what will matter most. HUI is right on the line. How will it close tomorrow?
I am holding my holders (plus a couple, I suppose), but cash is the thing. Same holds for the broad market, as I am not nearly sure it is ready to rally quite yet either. Wouldn’t it be something if SPX dinged the 50% Fib at 2100 while HUI dings near 100? Could happen?
Looking further out, if there is more downside to come we have a sneaky weekly chart gap just above 100. Does it need to fill? Nope. Can it fill? Oh yeah. Some may recall that week, when the gold stocks took a plunge below 100 to new lows, the bearish horns were blowing full blast and then, reversal. That spike in 2016 shows what the gold stocks are capable of when the real bids come. But all too often they come after the washouts.
We had the gap fills at and below 150 as a potential bottom. But the dwell below the 180 resistance and even the upper resistance at 200 keeps open the other potential bottoming area, which is near 100. I don’t want to sound like a bearish player because I am not. I am actually brimming with bull :-). But as noted in NFTRH 594, my pal Scott may well be dead on with his fat pitch at a test of the 2016 low, not sub-100 but right down near it. Regardless, I’ll plan to watch to see how Huey looks to close the week, whether above, below or at immediate resistance.