Wednesday, June 12, 2013

To stretch the bearish imagination, I've identified a worst-case target for HUI, which has looked heavy lately. A key support -- a midpoint pivot, also identified -- must hold if bulls are to avoid a cliff dive in the near future.

The Gold Bugs Index has been struggling to stay above the 239.44 midpoint pivot shown (red line), but if the support fails we could be looking at 185.41 as a minimum downside objective. More immediately, a downtrend on the hourly chart will need to hold above the 254.76 target (A= 283.19 on June 6 at 3:30 p.m.; B= 265.73 on 6/10 at 10:30 a.m.) to keep bullish hopes alive.

Bulls and bears have been in 'dueling' mode for two weeks, but the latter hold a small edge at the moment because the recent rally top at 891.00 conspicuously failed to surpass May 28's 892.14 peak. This is true for the 240-minute chart shown, although charts of lesser degree remain sufficiently bullish to imply that traders could position from either side, depending on what time frame suits their needs. Most immediately, camoflageurs should seek opportunity on the 30-minute chart, where a so-far minor downtrend promises to generate a subtly impulsive 'a-b' leg: a=883.96 on 6/11 at 3:30 p.m. EDT.

Yesterday's short-lived show of bravado failed to generate a bullish impulse leg on the hourly chart, so we should expect the futures to head still lower on Wednesday.  If so, the first place where we might look for bulls to find traction is at the 1617.75 midpoint pivot shown.  If attempting to bottom-fish there, as well you might, I'd suggest looking for your opportunity on charts of 15-minute degree or less.  Please note, however, that an easy breach of this 'hidden' support would be telegraphing more downside over the near term to as low as 1587.00 -- a drop equivalent to about 300 points in the Dow. ______ UPDATE (9:29 a.m. EDT):  With stocks opening momentarily, the futures have in fact shredded their way higher overnight, albeit without having generated a bullish impulse leg on the hourly chart. That would occur with an additional push of 3.50 points above the so-far high, 1638.00.  On the 60m chart, camouflageurs should note the location of two external peaks that look well suited to getting long with little risk. They lie, respectively, at 1641.25 (6/11 at 3:00 a.m.) and 1642.25 (6/10 at midnight).