[edit] In the time it took to write this update the broad market turned red and I also notice that Treasury yields have backed off, so with respect to the note that HUI is bouncing with cyclical markets, today’s signaling is good if Huey stays strong and the others continue to fade. Hmmm…
Reference the August 29 update plotting an HUI downside target of 178, using a daily chart measurement and longer-term support.
Huey hit 180.47 yesterday before springing its happy rally today along with most everything else. *
In essence the target has been registered as the original update noted “around 178” as the measured target for the little bear pattern. In essence, but not conclusively. As you can see it is bouncing, probably for a test of the pattern’s neckline.
The weekly chart from that update tells a similar story. The support area was dinged before today’s reversal.
The above are the technicals and whether or not HUI has ended its correction, if this support ends up being meaningful the technical risk/reward is good, assuming the macro fundamentals are good as well.
They are not yet. That is exemplified by the very fact that Huey is bouncing with broad stocks, commodities and other oversold items that I suppose needed a middling payrolls report like August for an excuse to relieve oversold conditions.
Now, the bottom may be in. I have no crystal ball. But the combination of (incomplete) fundamentals and (oversold but downtrending) technicals argue that it may not be in. I do not want to scare gold bugs away from positioning due to the caution signals still in play. In hindsight yesterday, which in essence hit a valid downside target may be looked back upon and touted by perma-bulls because they were finally right calling one bottom after another, as a great call on the bottom.
But speaking personally, I am going to let Huey take out the neckline and maybe even the SMA 50 before getting too excited. If so, we will have called the bottom and I will not have bought the bottom. The reason being that when the next real move comes it will probably be during a counter-cyclical economic backdrop (which is, IMO due to several indicators, developing now) and there would be plenty of time to position further.
HUI is still lower than when we reviewed the 8/29 update. I may or may not add an item or two with a big picture view in mind, but am in no hurry.
* For a sector we are viewing as counter-cyclical in its best suit, that it not ultimately what we are looking for.
