The bounce is on from the low of 180. We have potentials in play for HUI to have bottomed at 180 (measured target off of the little H&S pattern was 178) or to have new lows out ahead.
It sounds a little like running with the sentiment herds, but I lean toward (but have not set in stone) new lows to come amid a generally solid risk/reward scenario developing.
But let’s let the daily chart tell us what it has to say today.
- Neckline broken to the upside (minor positive)
- Resistance here at the EMA 20
- More resistance at the SMA 50 (204.36 and sloping down)
- Minimum objective to improve the technical view is to take out the Right Shoulder (208.35)
- Taking out the Head (215.93) and holding above it would target clear resistance at 240+ and potentially the SMA 200 (currently 253.69 and gently sloping down)
- RSI and MACD are negative, but RSI is on the verge of going green and MACD is up triggered. Not standing in the way of further bouncing.
- HUI’s relative strength to SPX is moderate on the short-term as broad stocks bounce as well. That’s not usually the prescription for solid run as a ‘unique’ sector for counter-cyclical gold stocks. The HUI/SPX ratio is holding it’s recent lows with RSI and MACD positively diverging, as per the previous update. That’s something, at least.
Bottom Line
Respecting the trends, it’s a bounce only and unfortunately, that would be the case even with a test of the resistance beginning at 240. That’s a lot of upside room. I’d prefer that if it’s going to fail it do so sooner rather than later. But whether it fails promptly or after a larger bounce, or goes bullish for real, I am going to let the macro fundamentals guide me.
It is much easier to buy a technically bearish market if the fundamentals are rock solid and as yet, they are not. They remain in development.
