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 a funk. In any event, use 171.00 as a minimum upside target for now. (30-min, A= 142.90 on 11/30).
