"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


Wednesday, March 6, 2013

Strong Finish to HUI

After what must no doubt seem a near eternity to many, there is finally a sign of life in the mining sector. A BULLISH ENGULFING pattern appeared on the daily chart today. This is a pattern that is generally valid after a prolonged downtrend. It also is much more reliable if overall volume is good. So far we have both ingredients in place judging from some of the actual miners today.

There are two things I am looking for at this point. First - I want to see this index close strong on FRiday of this week and not puke out over the next two days. Second - I would also like to see it push through 370 on a weekly closing basis within another week or so.

Aggressive traders/investors can wade into the water on select shares PROVIDED that they use sound money management techniques. That means this - if this week's low gets violated - GET OUT. Don't stand around arguing why the market needs to go up. GET OUT! You can always get right back in if the market action subsequently dictates it is okay to do so.

Longer range, more conservative oriented investors would probably want to see that weekly close above the 370 level to prove that this is anything more than a dead cat bounce and actually has some legs to it. One day wonders are becoming way too frequent nowadays due to the nature of computer algorithmic trading so some confirmation is warranted for those who like to see some follow through before making a move.

I am noting that the indicator has turned higher from an extremely oversold level but it has not yet generated a buy signal. The index will need to add to today's gains to trip it into a buy mode. Also, I like to look at previous peaks in the indicator to see if those can be bettered. Remember, a trend that has been a long time in the making is sort of like a gigantic cruise ship. It takes a while to turn. The same sellers who have been pushing these shares relentlessly lower will be looking for a place, a level, at which they can sell any rally UNLESS THE MARKET PROVES THAT THE TREND HAS TURNED.

Keep that in mind...


  1. not enough volatility today for the weird wollie weds. moniker, unless trading long bond or us dollar or wheat/corn..
    ..perhaps some misdirection thursday so the boyz can accumulate options for the way they plan to run op-ex week!

    mcclellan osc has a 'narrow change reading' theory being those alert to a big move coming..

    usda report friday- today the cat got out of the bag, should not be bullish wheat/corn...usda expected bullish soybeans as we don't have many beans left in the usa and beans are not yet moving from south america..

    the gold stocks and HUI have had these bounces all the way down, as can be seen on the above chart.... non-farm payroll fridays have not usually be good for gold, and of course the massive volume into the low around 1555 demands a retest...


  2. Thanks for the analysis. I'm just getting into the mining stocks, and it's really helpful to know where the market is heading. I really appreciate what you do here.


  3. Good advice.... Kind of dangerous jumping into the fray one
    way or another as it is not known whether a counter-trend
    has been established....there might be account whittling whipsawing until this is resolved. Also, trading on the long
    side of PMs is very fraught with danger from the ever-present
    manipulators that like to act when you are trying to sleep
    on Monday morning at 2am and you can't do anything to stop
    your losses. If I could lie, steal and cheat with impunity like they do, I would be a trillionaire too.....
    This is not "talent", this is plain criminality...

  4. Dan, one day on your metals wrap up, please comment on the fact that:

    - World record money printing
    - One QE program after another
    - Hockey sticked Fed Balance sheet

    Has resulted in an unprecedented, world record setting run up in retail and consumer stocks since the 2009 lows and a "1987 Crash" in the mining stocks.

    Who could have predicted that when the monetary firehoses were turned on full blast, the end result would be a parabolic move in XRT, XLY, RTH, etc. and a crash in XME and XAU?

    And on top of that, another world record run up in U.S. Treauries, muni-bonds, and other "Paper Assets"???

    I mean really, this is one for the history books.

    Jim Sinclair and Eric King would be rock star heroes today if they they told everyone to load up on consumer discretionary stocks and U.S. Treasuries instead of mining shares when we were coming out of the dark days of 2009 when Ben started printing money hand over fist.

    They would be featured as geniuses on CNBC, Bloomberg, etc. and would be buying $88 million flats on Park Avenue next door to Sandy Weill, Blankfein, and the other Wall St. chieftains.

    The amount of hedge fund wealth destroyed by betting on a falling U.S. dollar, hyperinflation, and a failing consumer must be a world record.

  5. Tonite I rest in the hills of Appalacia, very close to the unthinkable surrender of Lee's Surrender at Appamattox. Remember, the Central Government oppression through Lincoln (Obama the ultimate Politician)will only get the Northern Va Army. We the Rebels will cut down the gold bears and one day General Lee will ride into NY and cut down the NY Banksters the way Hooker was destoyed in Fredericksburg. Long live the Rebel Yell and the destruction of those who seek to have the Federal Government run over the States Rights. Long live Stonewall Jackson, and General Lee. We will cross the Hudson in the near future.

  6. White Wolf,

    Be heartened that the Feds are selling to the Chinese cheaply
    the very rope that the Chinese will use to hang them (Gold-backed Yuan). Get ready for the next world reserve currency to
    be Red and Gold with Silver Threads. Until that glorious day
    arrives, tag along with the manipulators to gain fiat to purchase physical... Realize the Feds are caught in a Chinese Finger Trap and the more they struggle to keep Gold
    suppressed, the more tightly they will be bound to their
    fate of No Exit.

  7. Hi Dan,

    I have a question : we are in vicinity of strong long-term supports on gold (around 1530 $).
    If the game is to buy as much physical gold as possible and sell the soon worthless paper on the other side, is it not a good time for manipulators to do so by breaking those important long-term supports right now?
    The tool : the same as in 2011 when silver reached 50$. Surprise, sudden, massive margin hikes.
    That would echo Jim Sinclair's recent interview on KWN.
    Leveraged buyers would be flushed out of the market.
    Manipulators would laugh and buy at the lowest prices ever before the next rallye.
    Is this theoretical scenario likely to happen very soon?
    Have a great weekend,


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