Here is the weekly price chart of the HUI. It did not end the week on an encouraging note, with the close being the lowest since the week of January 27 this year. As such, it is in serious danger of falling further and testing the support zone noted on the chart beneath it.
For the bulls to be able to have the least chance at mounting something to the upside, the downsloping trendline will need to be breached. That could form the basis of an actual reverse head and shoulders pattern but the big downside gap that formed last year in April near 300 would have to be closed for any serious upside fireworks to occur.
The pattern of lower highs since that month is suggesting that a "Sell the Rally" mentality currently exists in the mining sector. Downside support is also suggesting value-based buying is taking place but the question is whether or not these buyers have sufficient clout to ward off opportunistic sellers. The index is range trading with bears having a minor advantage for the time being.
With the ETF, GLD, losing gold, and with this continued weakness in the mining shares, the signals are not promising for the moment. Time will make things a bit clearer but for now, this sector has fallen out of favor with investors.
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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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