I have drawn in TWO support lines on the chart which have proven to be of significance to this index. The upper line comes in near the 520 level and the lower line near the 500 level.
When the HUI broke down below the first line in today's session, it immediately fell down to the next line or lower support level before bouncing. This lower line is now critical.
The HUI has had only ONE WEEKLY CLOSE below the 500 level the entirety of this year. That was back in June when it closed out the week at 496. The following week saw it close back above the 500 level which in hindsight proved to be the confirmation that a bottom was in for the sector. Perhaps that was a precurser of what we can expect this time around. Let's hope so.
You will note on the chart that over the course of this current year, there have been several other weeks during which the HUI had pushed down below the 500 level but by the end of the week, it had recaptured it.
We will need to see the index close the week above this lower line to prevent a deeper setback in the sector as a whole.
Note that the WEEKLY MACD is now in a bearish mode meaning that most likely rallies are going to be sold unless we see this indicator reverse to the upside.
The bulls have their backs to the wall and are going to need to stand their ground and dig in if they are going to be able to thwart this lastest effort at leaning on the shares. I would breathe a sigh of relief if the index can close OUT THE WEEK ABOVE the 520 level.
One final thing - the HUI/Gold ratio collapsed today taking it down to a new low for the year. It is now at levels last seen way back in March 2009 when gold was trading nearer to 930 - 940. Astonishing! Wait until some of these gold mining outfits release their quarterly numbers. I find it hard to believe that there is not going to be some very large profits being generated in this industry.
One final thing - the HUI/Gold ratio collapsed today taking it down to a new low for the year. It is now at levels last seen way back in March 2009 when gold was trading nearer to 930 - 940. Astonishing! Wait until some of these gold mining outfits release their quarterly numbers. I find it hard to believe that there is not going to be some very large profits being generated in this industry.
Thank Dan for all your posts. There is one question that I can't find a reasonable answer to. Why are all the mining companies being so viciously attacked? In the 1st two quaters of this years many of the miners were showing very good results and as you stated above earning coming out soon should be good also. So who is so determined to destroy the miners and why?
ReplyDeleteWhat are some good small gold producers? ie. TMM
ReplyDeleteWe saw a false technical breakout to the upside as the HUI blasted through 610 on its way to 638ish. No reason there won't be a false breakout to the downside as well.
ReplyDeleteI am not afraid of a weekly close below "support". A strong close above "key resistance" meant nothing....why would a close below support matter?
With all the HFT algo's and the PPT/ESF manipulation/interference...can this kind of analysis even be relied on any longer?
Were I to run PPT I'd definitely paint a breach on whatever technically important chart. If all you need to rig big panic is misleading Hedgies' pattern reading algos then I'll go for it.
ReplyDeleteProfit and a healthy company with proper future prospects does not matter for the stock value (anymore). It is all calculated. The more people are there “in” a particular stock the more, the more it will be suppressed. Therefore I am very curious how much people bought the Google share at $89....
ReplyDeleteLiquidity is being sucked out of these, especially the juniors.
ReplyDeleteThere is a possibility that these #$%holes will set the bar so high for earnings that the miners earnings will fall short. I can see it now it will be reported as an "earnings miss". Never mind profits up 300% when the expectation are for +330% earnings. Of course when AAPL profits they set the bar at +15% for the year over year
ReplyDeleteBottom to top, the HUI went up 325.33% in three years. The DJIA went up only 99%. I guess someone is REALLY determined to destroy the DJIA?
ReplyDeleteI think the metals and the miners are undervalued, but what I think doesn't matter. The typical person who is terrified of a deflationary spiral and market crash isn't going to hold on to an extremely volatile, US$300m market cap gold stock. Especially when they've made a decent profit on it, and it's showing signs of topping. They're going to flee to the 'safety' of cash/US bonds. (Though there is also some flight to physical metals.)
Here is my HUI chart:
http://2.bp.blogspot.com/-tgLYRTTKHHs/Tos8XjwG9yI/AAAAAAAACLA/67w_RIk_d-Q/s1600/hui.png
LOL....good luck to those that actually believe they are "safe" in cash and US Bonds.
ReplyDeleteAlso...Typical people are not who moves the market. HFT's move the market. There is no thought that goes into the mindless HFT algo's.