“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)

"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput

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Wednesday, August 24, 2011

HUI once again retreats below 580

Watching this game being played by the shorts in the mining shares as they attempt to extricate themselves from their rather tenuous short positions in the shares is shaping up to be mighty entertaining.

On Monday of this week, the mining sector finally blasted through the stubborn line of resistance that has formed on its price chart near the 580 level. It ran right through the 600 level and almost as high as 610 before settling near the high of the session. All in all, very bullish chart action. Yesterday it moved lower along with the gold and silver markets but bounced off the 580 level confirming that former resistance level as the new support level even though it ended lower on the day. It kept itself above the low of MOnday's session as well. That too was friendly.

Today, the shares were mangled with the result that the index collapsed back through that same old 580 level and was unable to regain its footing above it before the close of the trading session. It did managed a decent bounce off the session low however.

Since the middle of June, the mining sector, while lagging the performance of gold (and silver to a certain extent) , has been in a definite uptrend marked by a series of higher highs and higher lows. While the long suffering share holders have been distressed by their lack of upside activity, as long as the index stays above the uptrend line shown on the chart, it will still be in a bullish posture although it will have to clear 610 to get another strong leg to the upside.

If this index recaptures the 580 level within the next couple of days, the shorts are in trouble.


  1. Dan, thanks again.

    Any reason why you don't also look at XAU index?

    If you do, do you think there's any point in looking at whether price action/support/resistance, etc. on HUI is being confirmed by XAU?

  2. Seems like the mining shares are having birth pangs! Hopefully they'll start laying golden eggs for all of us to enjoy! LOL
    Thanks again Dan for the great post! We all appreciate your hard work!

  3. Amazing how the "Ratio Traders" keep killing it day in, day out.

    Every time the GDX/GLD ratio starts climbing out of the whole, they come in and slap it back.

    And the GDX now has a 100% success rate at "failed breakouts" over the last several years.

  4. as always, your comments and brilliant deductions are often dead on and are always greatly appreciated...

    steer safe during the pernicious and perilous times ahead - albeit brief...

    take care,Dan...

  5. Dan, I am wondering why you have not posted a Gold chart with price support/resistance levels in ages like you usually do?

  6. Thank you Dan. It looks like we got back above 580 today.

  7. Hope everything is well, Dan. We all miss you!


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