Gold Bugs Index

The weekly charge suggests clear sailing to at least 637.63, a Hidden Pivot that looks persuasive on the weekly chart (see inset).  If it is decisively exceed (i.e., buy more that $3 or so), however, a potentially more important target well above that price would be in play:  720.13, a key number identified here earlier.  That's where the weekly chart maxes out, so it is a logical place to infer a bull market top.  There is one other resistance worth mentioning -- a Hidden Pivot of lesser degree at 661.07 whose provenance is shown in the chart.

An inquiry in the chat room yesterday concerning the outlook for this vehicle sent me to the weekly chart, which shows two patterns projecting, respectively, to 661.07 and 720.13. Notice in the chart (inset) that the "sausage" peak recorded in December at 516 necessitates the use of the one-off 'A'.   The larger pattern yields a 541.69 midpoint; the smaller, a resistance at 576.55.  Both numbers should be held in mind as possible buying opportunities on a pullback.  I've set a screen alert, but so should you -- and I'd also be grateful for a nudge in the chat room, since I don't track this vehicle very closely.

The Gold Bugs Index is advancing on a 588.31 target that would have been a piece of cake were it not for a series of peaks just below the all-time high at 598.36.  Looking at a much big picture (see inset), there are two numbers we should jot down:   661.07, a 'D' target that could be described as "minor" only in the context of the monthly chart: and 634.64, the maximum high that can be inferred from the monthly chart.  They both look like high-probability bets, although it would imply a minor-trend extension of the major trend to reach the higher target.

Take a look at the chart and you'll see why more downside to at least 495.94 looks unavoidable. Short hedges will do best if initiated in relationship to the 521.55 Hidden Pivot midpoint.  Rallies above that number are implicitly likely to fail, while breakdowns below it are favored to reward conventional, Lindsay-style short entries.

I've cast today's forecasts for gold and silver in a more negative light than usual, since we don't want to be taken by surprise if the correction gains momentum. There are some precise benchmarks for determining whether this may be occurring, so I'd suggest checking out the touts for SI, GC and the Gold Bugs Index if you're starting to worry.

HUI's correction went impulsive on the daily chart yesterday with a breach of the external low at 530.01 recorded back in late November.  If the futures rally without going lower, the midpoint of the next leg down would represent a potentially excellent buying opportunity. However, if the Gold Bugs Index extends its losing streak with a breach today of the 525.00 low notched on November 16, that would be cause for concern.  From a structural standpoint, the index could fall to as low as 490.00 in search of support.  Alternatively, it would take an upthrust to at least 555.75 to return the lesser charts to bullish vigor.

The logic of an 8.5 percent rally to 622.78 from these levels becomes visually persuasive when you sketch it on the hourly chart.  More immediately, however, a midpoint resistance looms at 573.89, a little more than 16 points above yesterday's high. That can serve as our minimum upside objective for the near term.  FYI, the minor rally begun from Monday's 530.01 low projects above it, to 574.29.

Pondering HUI's immediate prospects, we can dispense with the subtleties of Hidden Pivotry and appreciate simple gravity at work, hauling the index down to some key lows near 490 that were recorded in late October.  If they are not going to be tested, the retro-rockets will need to fire either today or tomorrow to keep this vehicle from succumbing.  As I've notedabove, you can see this without having to much think about it.  From an impulse-leg perspective, it would require a further fall of 10 percent, to beneath the 476.40 low made on September 10, to seriously damage the daily chart.

The Gold Bugs Index will have a chance to create a potent impulse leg on the hourly chart today with relatively little exertion, since it would require a rally of just nine points to surpass the "external" peak labeled in the chart.  Still better would be a close above 520.61, a Hidden Pivot midpoint tied to a 'D' target at 550.85.