Daily charts of gold, silver and HUI
Gold is further on track this morning per our bounce theme. In taking out the SMA 50 it looks like the channel top is up next. Take that out and the SMA 200 would be the focus and the primary obstacle in the way of resuming the bull market.
RSI is positive at 56.52 and MACD is crossed up and on the verge of going positive (above 0).
Silver made a head fake below the SMA 200 on Tuesday. You’ll notice I stayed quiet about that. I did not want to raise undue alarm and get us played. Now back above the rising SMA 200 silver is dealing with the SMA 50, which is obviously the next objective to reestablish its uptrend fully.
Then would come 27.50, which is the top of the long-term resistance zone and finally a new high to negate the double top scenario. Silver is and has been in an uptrend, only now it has a chance to firm up that uptrend, which has gotten a good test with a couple head fakes below the SMA 200.
I like the look of RSI at 54.70, above its EMA 20. MACD is negative but crossed up.
HUI closed yesterday about to kiss the channel top. It will try to turn 280-285 to short-term support. There is some visible lateral resistance meeting the channel top area. But if gold stocks really are going to get the bugs cheering again a test of the SMA 200 is and has been the objective. Our operating objective is 305 to 307 (SMA 200).
RSI is nice above 50 and its EMA 20 and MACD is positive. Good stuff there.
Assuming Huey makes it to the SMA 200, since I don’t control the markets I can’t make a call on what comes next (end of the correction or failure for one final heart breaker) but we sure can watch indicators like sentiment (including Au & Ag CoT) and macro/sector fundamentals at that time. As of now let’s just call it on the plan we have established for a vigorous bounce to the channel top and/or the SMA 200.
Another indicator to watch will be the HUI/Gold ratio (HGR), which is still looking good after we twice noted its positive hints beneath the surface of things. Yesterday it tapped the SMA 200 and is RSI and MACD positive.
Obviously, what it does from here will be telling. If the miners start to fade in relation to the metal then we’d have a negative divergence in play. If HGR breaks out (and stays broken out) however, we’d improve the view from the current bounce.
