"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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Saturday, January 12, 2013
HUI showing some Signs of Life
However, the rally lasted no longer than 5 days and prices began to move lower again. However, the increase in the number of up days even as price worked lower began to be picked up by the indicator as it no longer marched lock step in union with price itself. As a matter of fact, the indicator has begun registering a SERIES OF HIGHER LOWS even as price has been making a series of LOWER LOWS. In other words, a near perfect textbook case of BULLISH DIVERGENCE is appearing.
This is a clue that perhaps the sector is getting ready to experience an upmove and finally reverse the downtrend. It should be noted that this is just a POSSIBILITY of an upward move occuring, not a certainty.
What needs to occur to confirm a definitive bottom is that an overhead resistance level must be taken out, preferably with good volume across the various gold shares that comprise this particular index.
Based on this chart, I have noted such an area. A CLOSING push through 455 or so will be a strong affirmation of such an occurence while a push through 465 or so will turn the chart decidedly bullish.
Let's wait and see what develops. For the time being note that were price on the HUI to fall down through support near 420 and be unable to recover that level on an intraday basis or by the next day of trading, the pattern would be negated and one would have to wait for further price action to decipher what comes next.