We’ve been using the chart in the earlier post since the depths of the crash to manage the A-B-C crash correction and the rally out of it. That chart has relied primarily on lateral resistance and support as it also took note of gaps to be filled.
Let’s take a different view now that the correction is well under way. I don’t usually put a lot of mental energy into trend lines, but some chartists do. The black and blue dashed lines highlight areas that some trend line watchers may be looking at. They include several spots where these lines acted as support or resistance.
The 50 day moving average (blue) is rising toward the top line and both are inside the chunky lateral support zone. This also generally matches up with a 38% Fib retrace from the lows. It would be a stronger bull signal for HUI to hold that Fib and the SMA 50. If this is a good bull we don’t need (or necessarily want) to see 50% or 62% retraces. Also remember that unlike HUI, GDX has a gap down by its SMA 50. It would be good to get that filled just below 31.
If things get funkier however, the lower blue trend line is lined up with the SMA 200. The breakaway gap is down there as well. Again, I have no interest in exploring these areas because a bull market should have no need for it. But what am I other than a man who makes pictures and shows them to you? This seems to be a pretty comprehensive picture of HUI’s daily chart situation. I personally have little concern about it unless it takes out 241.
As a side note, in yesterday’s TL Notes: “Unlike many juniors, some of the seniors flew too high too fast so if Huey pulls back that far it remains to be seen whether or not the little ones will also.” The HUI/GDXJ ratio is dropping since mid-March and that is an underlying positive.
And with that we conclude the precious metals micromanagement for the day.