The index is holding where it needs to hold in order to keep the long term trend intact.
Take a look at the RSI indicator shown below the price chart. This is the Relative Strength Index, a useful tool for gauging the internal strength or lack thereof within a market. Generally speaking, a market is in a bullish technical posture according to this index if the index moves within a range of 40 on the downside and 80 or higher on the upside. I use 70 on anything weekly related to gold as I have found it a better number to work with on the topside. Note that since December 2008, the weekly RSI reading on the HUI has worked between these two levels noted above. As long as the RSI stays above 40, the index will remain in a bullish posture.
As you can also see, prior to the trending move to the upside back in October 2008, the RSI had dipped as low as 25, indicating the bearish psychology that was still at work in the mining shares universe.
You can also note that during an extended sideways move which is one that leans towards a bullish slant, the RSI number, will generally work between 60 - 40.
An additional confirmation of the longer term bullish picture is the fact that the HUI has been running along the 50 week moving average as its lower boundary and has found buying in that general region of the average on retracements lower in price all the while the RSI has maintained its footing above the 40 level.
We will continue to monitor this on a weekly basis to see how it fares as we move forward into the year.
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