With HUI’s strong close and this morning’s strength in gold and silver the speculation (in yesterday’s TL Notes) about HUI 375 coming sooner rather than later is gaining the upper hand.
First, there are relative market considerations like the weekly HUI/SPX ratio vs. Gold/SPX. We used this chart recently to show that HUI’s stock market leadership had some catching up to do. It still does, especially if Gold/SPX rips higher again after pulling back.
And then of course there is this ridiculous monthly chart showing that even if gold pulls back vs. oil as it is indicated to do in pre-market this morning the fundamental indicator (Gold/Oil) is a million miles higher than the market that it is fundamental to. Amazing.
Here is yesterday’s daily HUI chart from the TL Notes with its 375 measurement.
And here is one of the monthly charts we have used over the last year to gauge a coming bear market rally to point C, AKA 375. Except that now, given the fundamental backdrop and gold stock market leadership the door has opened to something more than “bear market rally”.
HUI’s next objective is to take out point A and then we would officially load the 375 target. As noted in the TL notes, it could come much sooner and/or more intensely than conservative ole’ me had been expecting. 375 is not only the target, it is the only significant resistance level after point A’s 286.05.
As we also noted previously, the lower panel indicators are ‘all systems go’ and they have the juice to get Huey to target before getting overbought on this big picture monthly view. The implication is to buy pullbacks until 375 is registered and then we’ll evaluate at that potential profit taking opportunity (traders gonna trade on the way and momo’s gonna momo*).
* I have been asked to write more clearly for people who may not know the jargon, so “momo” is for momentum, as in momentum players, as in late comers who will buy breakouts and ride an obviously bullish horse as long as it’s bullish. There is a lot of space between points A and C, after all.