HUI - Dead Cat Bounce or Something More?

The mining shares displayed an unusual bit of activity in today's session (Thursday). What was that you ask? They went up! Better check that because it might have been a misprint on the tape. I am not sure what the catalyst was other than some profitable bears ringing the cash register but they at least stopped moving lower for a day.

Here is a longer term chart of the index where you can see that it has entered a support zone surrounding the 61.8% Fibonacci retracement level of the 2008 low and 2011 high. If this index cannot get back above the 375 level, there is a chance it could fall as far as the region marked, "SECONDARY SUPPORT ZONE".

The repercussions of such an occurrence would be a further drop in the price of gold. That or else the HUI/Gold ratio would be reaching levels that would stagger us all.

I would not make too much of today's pop higher in the mining shares unless we see this index move back above this week's high. Even at that, I would prefer to see it clear 375 to indicate this move lower has put in a spike bottom. Bulls will not be able to breathe a sigh of relief until the HUI is sitting with a "4" handle on it again.