HUI pushing into Chart Resistance

The HUI had a strong showing this week as the return of the risk trades drew money into the sector. Along with that, many investors have come to view the sector as generally undervalued based on the good numbers being reported by several miners and the fact some were raising dividends.

The result was a move back into the large gap region formed in September when gold and silver were both taken down quite hard. Last week the index mounted its first push into the gap and managed to hold the level going into the weekend. This week after some initial weakness, it found willing buyers who came in and took it further into the gap closing above the 590 level. The index now has the potential to mount a push towards 600. If it can do that successfully, it should be able to close the gap completely. That would be a major victory for the bulls.

Note that the market found buyers on the last two days of this week when it fell back towards the BOTTOM of the previous gap near the 580 region. That is good technical action.

Let's see what we get next week with the risk trades. If they are back on, the HUI is going to hit 600.