A Hidden Pivot target at 476.74 is the number to beat (or at least achieve) for today. Its provenance is shown in the chart, along with an alternative target at 484.23 that should be considered the best-of-all-worlds price objective for this week or early next.
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Gold Bugs Index
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Yesterday’s low came with 0.64 points of an important midpoint pivot I’d flagged, so we should pay close attention over the next day or two to determine whether it may have marked a crucial turn. This would be confirmed by a print exceeding a look-to-the-left peak at 507.38 recorded on December 3, although a less ambitious benchmark at 493.87 can serve for now.
A Hidden Pivot resistance at 576.19 seems reasonable for the next 5-6 weeks if not sooner. Long-term traders please note: The target’s midpoint sibling lies at 469.72, and any pullback to that level should fully correct the Gold Bugs Index for the next intermediate move. More immediately, a booster thrust of at least 15.62 points is needed to launch a rally to as high as 534.35. This target was derived from the daily chart, where A=439.68 on May 5.
The rally from mid-April’s 392.57 low slightly exceeded a 471.54 target, but we should be less than thrilled because the high itself fell just a smidgen short of an important peak at 475.32 recorded back in January 11. While that is not bearish per se, it does suggest that any attempt to challenge the watershed high at 516.16 recorded in December is likely to be a labored affair. If the HUI were fixing to blow this resistance to Kingdom come, it would have displayed its feistiness by kicking 475.32’s butt when it had the chance. It’ll have a second chance at 469.72, a midpoint resistance tied to a ‘D’ target at 576.19. If HUI can bulldoze the resistance and close above it for two consecutive days, I’d rate it an even-money bet to take on December’s key high at 516.16 successfully and without too much bloodshed.
The next surge should see a test of January’s key high at 475.32. First, though, the Gold Bugs Index will need to put in a bottom that ideally is above 415.81. (This is analogous to the low given as ideal in today’s June Gold tout.) If Friday’s 420.52 low holds up, a subsequent two-day close above 447.27 would signal that a bigger rally to at least 474.02 is under way.
Immediate downside exposure on the weekly chart is to around 377.95, the Hidden Pivot midpoint of the pattern shown. If the target should be exceeded on a closing basis for two consecutive weeks, however, the implication would be bearish indeed, since the ‘D’ sibling of the target lies at 321.92. My gut feeling is that the midpoint will hold, and this hunch comes from the fact that HUI has already aborted one downtrend in the corrective cycle begun in mid-January. The turn higher came from well above the midpoint support as well, and it suggests a lack of conviction on the part of sellers.
A 377.79 downside target given here earlier is still viable, but we can lower the bullish reversal threshold to 426.93 from 433.99, since that’s where the hourly chart would turn positive again. If instead HUI heads lower, bottom-fishing at 399.46 would be a decent speculation. We’ll make that our minimum downside target for now.
Dueling impulse legs on the weekly chart hint of more dithering for perhaps months to come. Even so, a dip to 377.95 would create a tempting buying opportunity, since that midpoint support is relatively isolated from the interference of prior lows. We’ll make it our minimum downside objective for now, subject to negation by a pop above 433.99, the point ‘C’ of the pattern.
HUI – Gold Bugs Index (Last:487.48)
by Rick Ackerman on June 29, 2010 5:33 am GMT