From yesterday’s update using the chart below…
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.
HUI went on to ping 325 and it would have been surprising had it not paused there. The daily chart has gotten moderately overbought and a reaction back to the SMA 200 would also be normal. That is not necessary to relieve the O/B. That could come through a few days of grinding (consolidation) as well. We’d want to see RSI meet its EMA 20 and hold it.
Referencing back to the beginning of the rally we had established 325 as a viable upside target (beyond the main ‘bounce’ target of 305-307) as well. Anything above the SMA 200 also opens up the prospect that it will have been more than a bounce. Now the real work begins as the index is only now starting that process. The sector and macro fundamentals are making hints toward change and this is pretty much it, the point where the miners turn this thing real or fail.
Bottom Line: HUI is getting overbought and the reaction at resistance is not only normal, it was a shoe-in. Items like Gold/SPX, Gold/CRB, Gold/Copper, etc. have twitched off the lows. Personally, these indicators will go a long way toward firming me up or muting my interest. I’ll reserve the right to take profits if/as desired until a clear picture emerges. But technically at least, HUI is so far doing what it needs to do to change the trends back up.