It did not take long for the longs in the gold mining sector to start a wave of profit taking. That came in when the mining indices could not extend their early-in-the-session gains. As a matter of fact, the opening print on many issues was the high for the day, or very near the high of the day. From that point forward, the shares drifted lower most of the session until they began to accelerate lower during the last hour of trading.
The result is a SHORT-TERM sell signal on the price chart although no major damage has been done to the uptrend at this point.
As long as this particular index holds near the 43 level, the retreat in price will be seen as a correction in an ongoing move higher. Just like this index did late last month, it could be merely pausing to gather its breath while it undergoes some consolidation of its recent gains. One would not want to see the index fall below 40 however if they are inclined to be bullish. That would shift the momentum back in favor of the bears.
The HUI on the other hand, just missed putting in what is termed a "Bearish Engulfing Pattern". It was only the appearance of some buying right near the closing bell that prevented the full formation from occurring. That being said, the near term price action is bearish.
I did not note it on the chart but there is a price gap coming in near and just below the 240 level. that might be a place to look for some buying support in the various shares that make up this index. Failing there, the index will look to try to hold above 232. If that fails, then we go to the gap region noted. Bulls will now need to extend prices past today's high to regain their advantage.
"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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