Today HUI takes out the 1st ‘get out of jail’ point on the daily chart. We noted this and the 2nd ‘get out of jail’ point at 325.26 back in March. Nothing at all has changed other than Huey is still on its rally and has taken out the SMA 200 and is now working on the gap and the 325 marker. At that point there exists the lateral resistance traffic as noted on the weekly chart this morning. The red arrows show the touch points of that resistance.
As noted, I am and have been using an open mind regarding this situation since the beginning of the ‘bounce’ rally. That is because Huey bottomed at a low that could have been a viable major one. Now Huey takes the SMA 200 today.
That’s good. We’d like to see that hold. But if it does not, the daily SMA 50 (blue) is curling up and soon out of the downtrend channel. That will be an important support area too. These obviously match well with the support parameters noted on the weekly.
Bottom Line: HUI is coming up to the next important test after making a technical break above the SMA 200. It is also filling a gap today. All along we’ve had another gap at 342 on radar and that could also fill. At some point you’ve got to give Huey his due because this is a bullish handle (much like gold) that has been in play since last summer, grinding away at the gold bug psyche (a good thing), and a handle breakout is what it is. A breakout.
Separately, certain sector signals either remain positive (like HUI/Gold ratio) or are flipping positive (like HUI/SPX and Gold/SPX). That is why I am staying open minded here, despite the volatility sure to come. If these hints start to fail beneath the surface the view will degrade, assuming HUI is still below some of these upside objectives. But the other possibility is a rational one as well. That would be the technicals of this rally may be looked back upon as having led the fundamentals, which are only making very early hints by some measures.
Additional Note: I am managing with healthy cash and should also remind readers that I am not a one-way gold bug. Not obsessed in the least. Gold stocks are currently a balancing aspect of the portfolios. If the move proves real, as it’s got a chance to do, I’ll adjust weightings, especially if some of the risk ‘on’ stuff starts to fail. But for today, a step at a time.