"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, December 14, 2011

HUI is bouncing from the bottom of its year long range

Over the last 14 months, the gold mining shares, as represented by the HUI, have been trapped in a very broad range bounded by 600 on the top side and supported by 500 on the bottom side. The fact that this range has continued for such a long period of time and has repeatedly reinforced itself underscores how important from a technical perspective it is should anything occur which forces a violation of this range.

Having moved down to the bottom of this range in today's session it has of this hour bounced rather strongly off of that level once again. That is reinforcing the significance of the 500 level on the technical price charts and makes it all the more critical that the HUI not close substantially below this level. 

A weekly close below 485 - 480 would therefore signify that something significant has changed in regards to investor/trader sentiments towards the precious metals sector as buyers pull back on their bids expecting lower prices. Owners of these shares will want to monitor trading action closely to see how this sector reacts as we move to the end of the year. Odds favor a continuation of the sideways trading pattern but if sentiment sours further as traders fear inaction by the monetary authorities, support levels could give way. We just have to wait and see what the market tells us.

1 comment:

  1. well, on gold now, here is the snowball effect I was anticipating yesterday if gold would get through its 150 MA daily.
    Lots of operators probably liquidated their longs when we went through it because of cascading stop losses.
    If so, might be an opportunity to buy soon. But I'd be extremely careful, as if snowball continues, gold might actually break its long term corridor, especially its long term rising wedge (on an log monthly scale), and that would mean more long liquidation...


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