NFTRH has had several themes in play on the gold stocks. One was the potential for a ‘W’ bottom, which has been obviously negated. The other is a bottoming pattern with a target off an Inverted Head & Shoulders, which could serve to flush the remaining holdouts as it makes a ‘Head’ at a target significantly lower. These were in consideration of weekly MACD and TRIX up triggers. The two bottoming patterns would be ultimately bullish after differing degrees of pain, but other prospects are really disgusting and are also in play.
One theme has been for a break of the long term trend line that every chart geek and his brother is watching, and there it goes. This would inspire a panic, a final flush that would be needed to end or suspend the bear.
We have been working a theme lately about the mania going on in US stocks (some valuations are not overly manic but policy sure is) and also the one going on in the mirror (a fun house mirror at that) in the ugly precious metals sector.
We are in a time of utter reverence for great and powerful Oz-like people doing not so great things to the rates of interest that would be paid to savers and prudent people (Zero Interest Rate Policy or ZIRP), and doing wonderful things for leverage (substance) users, speculators and asset owners (MBS and long-term T bond buying).
It has been 2 years of chop, grind and drop in the gold sector. 2 years since my lousy projection on HUI’s monthly chart failed to do what the Russell 2000 still has a chance to do; measure the ‘Cup’ to an upside target.
The weekly chart of the HUI Gold Bugs index asks a question we have been reviewing in NFTRH for some time now; is the bottoming situation implied by the up-triggered weekly MACD (and confirming TRIX) a ‘W’ bottom in the making that saw its low at 206? Or is it an Inverted Head & Shoulders (IHS), that would theoretically make a final washout below 170 as a ‘Head’ is formed?
Ever since the current (final wave 5?) leg in the now 4 year, 7 month old US stock bull market generated in November of 2012, NFTRH has tried to make the point that there is no new secular bull market in US stocks. Indeed, there is a maturing cyclical bull market that has another 5 (+/-) months to live if it is to match the two previous cycles. The bubble leader, Russell 2000 does after all have a measured target of 1350 (Kisses Goodbye).
Why do we call the US cyclical stock bull a bubble you ask? Because of this chart (courtesy of SlopeCharts), variations of which NFTRH subscribers have been repeatedly hit over the head with just to make sure that we know what we are dealing with.
Was a world full of chart jockeys just waiting for gold 1350+ to pile into gold stocks?
A quick update on the status of the weekly view of HUI and its projected ‘W’ or ‘IHS’ bottom as noted in this week’s letter.
But first, to review the daily situation, HUI made its first close above the resistance at 230 (as noted in an update last week by a daily chart). The next important task is to take out the 50 day moving averages, which are currently 234.55 (EMA) and 241.50 (SMA).