HUI

I've resumed tracking of the Gold Bugs Index because gold is busting out all over. (See my corresponding bullish comments on the yen elsewhere on this page.) Although HUI has made a mess of the 161.10 midpoint resistance, it is getting past it nonetheless. The sloppy price action suggests that the expected rally to D=171.26 will be labored, although not necessarily; we could be pleasantly surprised. We'll reassess the power of the move once we've seen how buyers interact with D=171.26. If they can push decisively past it, that would indicate that the trend is likely to continue.  Traders please note that if HUI goes no higher than 163 or so,  a pullback to 156.01 (the green line) would trip a mechanical buy signal.______ UPDATE (Jan 16, 8:25 p.m.): Far from gifting us with a pleasant surprise, the Gold Bugs Index has been positively leaden. It's close to setting up a 'counterintuitive' buy, but I will not explicitly recommend the trade. Instead, let's just watch and see whether bulls can seize the advantage that this type of trade typically affords them. _______ UPDATE (Jan 20): The 'counterintuitive' buying opportunity faded with barely a whimper Friday as HUI sank to a one-month low. It would take an upthrust touching 153.43 by Wednesday to revive it. _______ UPDATE (Jan 29): By now we should have become used to gold taking us to the brink of despair each and every time it is about to launch higher. HUI gapped past 153.43 three days ago and has been in a vertical parabola since. Call options easily bought for 0.07 ahead of the move are fetching 0.40-0.50 today with the stock trading around 123.74. The options are no longer such a fetching buy, not that they were much moreso at 0.07 with the stock in

If the Gold Bugs Index were to slip beneath the 132.32 Hidden Pivot support shown in the chart, it would put a 97.18 target theoretically in play. This worst-case number is calculated by shifting the point 'A' high of the pattern up to 2016's peak at 286.05. Such a dire scenario is by no means assured, since the downtrend has so far been arrested at the p2 secondary pivot of the larger pattern -- a logical place for a correction to end. However, it would take an upthrust exceeding 162.44, a 13% move from here, to turn the daily chart unambiguously bullish. The number 162.44 is equal to a look-to-the-left peak recorded on August 9 before HUI went over the falls._______ UPDATE (Nov 18, 5:07 p.m. ET): Buyers caught fire last week, rescuing the Gold Bugs Index from a punitive selloff that had threatened to test September's abysmal lows near 130. Bulls will face a key test just above, however, at the 151.16 midpoint resistance shown in this chart. If they can penetrate it decisively, or close above it for two consecutive days, that would put the 165.06 target well in play._______ UPDATE (Nov 26, 5:41 p.m.): The rally has laid an egg after pushing slightly past the 151.16 midpoint pivot flagged above. A two-day sell-off has not doomed the effort, but bulls will face a crucial test if HUI pulls back to 144.20, since that is where a so-so 'mechanical' buy signal would be triggered. Here's the chart._______ UPDATE (Nov 27, 8:27 p.m.): The so-so 'buy' signal has triggered, but we'll ignore it because bulls have fared poorly in this vehicle when seizing such opportunities. Come what may, our gain for the time being will lie in the learning process.

I haven't featured the Gold Bugs Index in the touts section for more than two years because my outlook has been so bleak. It may be time to look on the bright side, however, since HUI has turned up from within an inch of a long-term Hidden Pivot support at 133.37. The actual low, recorded a month ago, was 133.12, and it marked the beginning of an 18% rally that has steepened noticeably in the last few days. Buyers would need to hit 162.45 to refresh the bullish impulsiveness of the chart shown -- a tick above an 'external' peak recorded August 9 on the way down. The peak is a very small one -- a look-to-the-lefter, actually -- but it is sufficient to give us a handhold for trading if HUI should pull back from above it. Last week's rally was robustly impulsive on the daily chart, but we'll need to see a correction and a follow-up thrust to get a better idea of how much power is pushing it._______ UPDATE (Oct 28): HUI took a steep dive last week after topping 3.50 below our 162.45 'green light' threshold. This is disappointing, but merely so, and anyway, we should have become used to such behavior in gold by now. _______ UPDATE (Nov 3): The week ended with a mildly encouraging, bullish impulse leg on the hourly chart.  It yields a 151.95 projection, but possibly 156.35 if any higher. _______ UPDATE (Nov 5, 6:02 p.m.): Buyers poked an inch above the 151.95 target, then retreated like sandpipers from the tide.  The 156.35 target will remain valid as long as 147.55 is not exceeded to the downside. _______UPDATE (Nov 7, 9:57 p.m.): The 156.35 target has been invalidated by HUI's moderate pullback, but not the bullishness of the hourly chart. Buyers

Swinging for the fences, we've held onto a round lot with a profit-adjusted cost basis of 116.20. I'm going to recommend selling it on Friday's opening for a theoretical gain amounting to $7708 at Thursday's closing price. My reason for doing so is that HUI has sold off sharply after topping precisely at a 207.76 rally target that had been two months in coming. This suggests that at the very least, it will take a couple of weeks for HUI to consolidate sufficiently to move higher. Of course, there is always the possibility that the recent top will prove to have been an important one.  If so, we'll look at possible plays in DUST, an ETF with leveraged exposure to price declines in mining shares. In the tout above, you can find a technical prospectus for this issue. ________ UPDATE (April 15, 10:08 a.m. ET): Exit on the opening came at 194.28, producing a theoretical gain of $7808 for each round lot held since the initial trade.  For now, do nothing further. (Note: In practice, because HUI does not trade, any of its 15 component stocks could have been substituted and would have produced an equivalent gain. Goldcorp, a highly liquid vehicle, or options on the stock, probably would have worked best.)

The Gold Bugs Index smashed through 'hidden' resistance at 175.86 on Friday, implying that bulls have bigger things in mind. The subsequent pullback from p2=182.16 has validated a pattern and its 196.68 target. To get long, I'll suggest a 'mechanical' bid at p=167.64, stop 157.96. Since it's a Sunday night and one can't tell what kind of mood will prevail as the new weeks begins, I'll suggest initiating the trade 'mechanically' only if Comex April Gold opens relatively quietly -- i.e., within $3-4 of Friday's settlement price. Less caution would be needed in the unlikely event the correction comes all the way down to x=153.12. You could buy there with a stop-loss at 138.50.  If you prefer to use options instead of stock, stick with at-the-money calls that expire in 2-3 weeks. If, after buying calls, the initial move should be up, allowing one to leg into a $1 vertical call spread for free or even a small credit, don't hesitate to nail down risklessness at the first opportunity. ______ UPDATE (March 12, 2:07 a.m.):  The 167.64 bid would have filled painlessly, since HUI pulled back to 167.25, well above the suggested stop-loss, before  blasting off.  Now, exit half the position at p2=182.16; and another 25% at 196.62, just below our immediate target.  Both orders should be held o-c-o with a stop-loss at 172.54.  ________UPDATE (March 14, 11:4 p.m.): The last rally leg missed 182.16 by inches, leaving us stuck with the position. A 'dynamic' trailing stop would have taken you out of half at 180.51 with a nice profit, but since I didn't suggest this explicitly, I'll assume 400 shares still held with a 167.64 basis. For now, place a stop-loss at 165.24. _______ UPDATE (March 16, 11:13 p.m. ET): This afternoon's ballistic rally bids fair to push this

It's been a while since we looked in on the Gold Bugs Index, but as we might have expected, it has kept pace nicely with the rally in physical gold prices. The bullish pattern shown projects to as high as 175.68 over the near term (see inset). That's a Hidden Pivot resistance, and its attainment would become an odds-on bet if and when HUI exceeds the secondary pivot at 166.41 by at least 1.50 (or so) points. The weekly chart is especially bullish, since the strong move off January's 99.19 bottom is still uncorrected. The rally has already exceeded two 'external' peaks on the weekly chart, but if it were to get past yet another at 187.17 recorded in May, that would lend weight to the possibility that we are seeing the nascent stage of a major bull market. _______ UPDATE (February 24, 8:20 p.m. EST): The sharp reversal off a spike high on the opening bar may have trapped a few bulls, but it did zero technical damage to the intraday charts. The 175.68 target noted above remains viable and should be used as a minimum price objective for the near term. Bulls looking for a belated opportunity should use p=166.41, or possibly p=157.14, as 'mechanical' launching pads. You're qualified to attempt this trade if you know what stop-loss would apply from either of the two levels.

Bulls should find it worrisome that the autumn high of 139.55 failed to surpass an external peak at 143.14 recorded back in July.  That would have made a significant difference in the way we look at the chart now. As it stands, there is only one low in this picture that could be used as a point 'A' to project a major rally ahead. However, strictly speaking, it is unusable for this purpose because the would-be impulse leg that followed it did not surpass the required two prior peaks. This is a technical distinction that only those who have take the Hidden Pivot course will fully understand. However, the bottom line is that it casts a shadow on the otherwise encouraging rally that has unfolded since mid-November.  Despite this, I will continue to give the short-term picture the benefit of the doubt, since we can never know for certain when, or even whether, a bear market may have ended.  Even so, the evolving, bullish look of the daily chart must be weighed against a bigger picture that suggests disappointment may lie ahead. _______ UPDATE (January 19, 8:39 p.m.): Sellers creamed HUI Tuesday, but will still have a chance to reverse direction from 96.72. That's a midpoint Hidden Pivot support, and it can be found on the weekly chart using these coordinates: A= 186.94 on 5/15; B=101.28 on 9/11; and C= 139.55 on 10/16.

The Gold Bugs Index has shown a little more pluck than the futures lately, holding its own for the last two days after notching a promising impulse leg with last Friday's gap-up opening.  Now, unless sellers push this vehicle below 222.70, we should anticipate a new burst of strength to as high as the 232.46 target shown. A close above the 228.47 midpoint pivot with which it is associated would make a follow-through to the target an odds-on bet.

Like so many other gold vehicles, this one looks unlikely to avoid a test of 2008's watershed low at 150.  It has likely become magnetic by now, and although we needn't attach much significance to a breach of the low, assuming one occurs, the short-squeeze that follows a running of stops just beneath it would need to be a humdinger to power HUI out of the hole. What would it take to annul this very bearish outlook? Answer: Nothing less than a rocket ride exceeding 291.07 -- a 31% rally from here.