Gold Bugs Index

A rally target at 576.19 that was first broached here nearly a month ago (with HUI trading around 500) is now in play, since a lesser target at 529 has been decisively exceeded. A secondary target at 558.55 is also beckoning, and so we'll make it our minimum upside projection for the near term.  If t should be exceeded on a closing basis for two consecutive days, the higher target would become an odds-on bet. Both targets come from the weekly chart (see inset).

Even after yesterday's hit, there are no downtrending patterns or impulse legs on the 240-minute chart, and it would take a drop to below 500 to create the latter.  If we extrapolate a pattern very similar to the one that nailed yesterday's peak in Comex Gold, it yields a target at 554.23 and a midpoint resistance -- already obliterated -- at 522.82.  More immediately, a two-day close above 525.72 would signal a likely push to at least 541.42.

I've previously noted major rally targets at 558 and 576 that come from the daily chart, but we should also pay heed to a lesser one at 529.23, a Hidden Pivot that is clear enough on the 240-minute chart to be viewed as compelling.

On the daily chart, a major Hidden Pivot at 558.55 can serve as a minimum upside objective for the near term.  However, if it's exceeded on a closing basis, or intraday by more than a couple of points, we should infer that the 576.19 target of an even larger pattern is in play. Both patterns are shown in the accompanying chart, and in each instance the rally had little trouble getting past the respective Hidden Pivot midpoint. This bodes well for a presumably imminent attempt to surpass the  watershed peak at 516 recorded in December 2009, although I don't expect this feat, which could be achieved as early as today, to evince much strain.)

A Hidden Pivot at 576.19 looks safe to use as a minimum upside projection for the intermediate term now that its sibling midpoint at 469.72 has been well tested as a consolidation level.  Pivoteers may have noticed that this week's gains have pushed the futures above peaks from mid-May and early July, and although the rally is not quite impulsive on the weekly chart, it attests to the persistence and strength of buyers. From here there are just two more peaks to be dispatched, and the Gold Bugs Index could do it with a moderate thrust of just 20 points. There is also one additional hidden resistance at 540.61, but I proffer it merely as a trading point, not as a show-stopper.

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.

The Gold Bugs Index looks vulnerable to a nearly 5% drop, assuming it falls to a Hidden Pivot support at 414.00 that comes from the daily chart. This target is tied to a point 'A' high at 471.18 recorded on July 13, but if HUI should overshoot the target by more than a point or two, the implication would be new jeopardy to as low as 383.96. I doubt it will be that bad, but in any case it will take a rally to at least 459.98 over the next 3-5 days to turn the hourly chart bullish.

The narrow failure of yesterday's rally to push above the 502.15 peak from May 12 was a cautionary sign, since bulls with designs on impressive new highs would never have been so timid.  However, they'll have a chance to turn things around if the pullback hits 483.71 (see inset), a minor midpoint support. If it's taken out, though, we could expect the selling to continue to at least 476.85.  These targets will remain valid as long as 490.58 is not exceeded to the upside first. Either can be bottom-fished with a stop-loss as tight as 5-6 cents.  ______ UPDATE:  It was all over for bulls on the opening bar, since HUI gapped down to 475.68 in the first minutes of the session.  This refreshed the bear trend as well, creating a minor impulse leg that projects most immediately to 467.31.  Bottom-fishers would have been stopped out for a small loss.

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.