HUI – Gold Bugs Index (Last:328.31)

Someone mentioned my bullish targets for this vehicle in the chat room Thursday, so I thought I’d have another look. Despite the selloff in physical gold, the outlook for stocks tracked in the Gold Bugs Index remains bright.  Yesterday’s cascade did no technical damage whatsoever to the intraday charts, and the slide would need to hit 314.05 for this to change.  Also, it would appear that the weakness began from within a couple of points of the Hidden Pivot target at 341.01 shown in the chart. However, the higher targets of two larger patterns — respectively, 361.53 and 393.88 — remain valid. ______ UPDATE 1:15 p.m.): HUI has reconciled its short-term divergence from physical gold by creating a bearish impulse leg on the hourly chart this morning. This was accomplished by breaching lows at 315.11 and 314.06 that were made respectively on March 30 and March 24.  This indicates only minor trouble so far, if that, since it would take a plunge exceeding 241.78 to turn the daily chart bearish.  Near term, there are no especially compelling downside targets based on Hidden Pivots. However, a 50% retracement of the rally begun  from 266.53 on March 18 would bring the index down to 304.90, a 3% drop from here; and a 0.618 pullback would imply 295.84, for a 6% drop.

Tagged as: Forecast, Gold Bugs Index, HUI