HUI: Mr. Green & Mr. Red

I want to show you the weekly chart of HUI that NFTRH has been using along with monthly and daily charts for much of the last year.  The dailies controlled the short-term and kept us aware (and out of harm’s way) that a breakdown was very possible, even likely, during the Ukraine noise over the summer.  The monthly gives other parameters that you can see if you click the Big Pic HUI, Au & Ag link above.

The weekly however, has guided NFTRH subscribers with Mr. Green and Mr. Red, otherwise known as the green uptrend channel and red downtrend channel.  Mr. Red scored a blow to Mr. Green’s gut when the sector rightfully dropped as the Ukraine hype wore off *, leaving it with little more than its incomplete (at best) fundamentals.  Now it is Mr. Green’s turn.  He needs to defend himself by defending the 205 to 210 zone.

This is an over simplification and there is a lot more to the picture, from indicators to macro fundamentals that are giving mixed signals.  All the more reason to go by the technicals and be cold and calculating.  In Q4 2008 there was no need to be patient.  The sector was crashing while fundamentals were insanely bullish.  I bought with both hands.  Today, that is not the case.  So heroics – and bottom calling – have not been advisable.

The bull case will either unfold or take another drubbing.  But this drawn out event has been much different than the flash event in 2008.  It takes much more patience and much more ongoing evaluation.  If it goes for Mr. Green, the gains could be stunning.  If it goes for Mr. Red, quite the opposite.

All the while we have to evaluate the perceptions game going on in the markets all around the precious metals.  HUI, gold, silver, etc. do not exist in a vacuum.  They are basically tools for certain environments.  So let’s also realize that obsessing on any one asset class to the exclusion of others is pretty unhealthy.

Right now Uncle Buck has crashed the party and announced himself.  This is part of our macro plan, but it is early.  I’ve written enough on the USD over the last week, so you know my thoughts if you care to know them.  Most people think he will take Mr. Red’s side and pig pile on the miners.  But a strong dollar should ultimately go with current macro plans.  You just won’t get that story from the promoters because it is neither easy to explain nor understand.  But until we see signs of economic contraction, the plan waits… with patience.

As it stands now, chances are HUI will try to bounce at one of the green supports noted.  But it won’t begin to prove anything (beyond a bounce) until the red downtrend channel is broken.  Just thought I’d pop up some thoughts on Huey’s interesting status for your consideration.  Meanwhile, there’s a regular stock market out there to be managed and it’s bullish for now.

* I would like to think people took notes over the summer as to who was justifying (i.e. promoting) this bogus ‘fundamental’ as a viable consideration either positively for gold, or negatively for the stock market.  It was not, obviously, just as noted here again and again in real time before the drop.