HUI Index Daily Chart

Marketclub – HUI Index Trend Analysis Marketclub - HUI Index Trend Analysis (What’s this?)

As you can see on the chart  the HUI Index broke through the main trend line on the 20th of January. From that day on it was down to our first zone of support which was around 360. From there on the HUI tried to make a break for the 30 MA but failed to achieve that and found another bottom and support around 380 before continuing on its current up path which it is still doing for the time being.

This time however we did manage to break the 50 MA which was at 416.

The ADX chart tells me the down trend has considerably weakened. I see that from the ADX which is the blue line. This moves with the stronger trend and has now declined from earlier highs. +DI is starting to take the lead again indicating that the force of upward moves is increasing. The trend could be changing. +DI is already on the move…ADX will follow.

HUI Index Daily Chart (5-year)

Marketclub – HUI Index Trend Analysis Marketclub - HUI Index Trend Analysis (What’s this?)

As you can see from this chart we have the main trend line starting from back in October 2008 reaching all the way up to present times. That is my main line I use.

Again, notice the day it crosses below that main trend line. See the corresponding time frame at the ADX chart. A cross of the ADX and the +DI and also a clear signal as to the change in trend.

The negative divergence would have been another clue of what could happen at that time. A negative divergence happens when the stock is making higher highs while the MACD is making lower highs each time. That is a bearish signal. Divergence are not that common so therefore I give a little bit more credibility to such things. Mind you, in combination with other indicators of course.

Anyway, I also have drawn out 2 possible scenario’s which might happen. I’d prefer to go for scenario 1 cause it is my opinion that gold simply CANNOT be held down any longer. I already explained what could eventually happen if gold were to be kept down any longer but it was not a pretty picture and it left some of my readers with a little bit of nausea.

So, since I appreciate the remainder of my readers tremendously, I will spare you the juicy details but just know that is the authors opinion that we could be looking at a good month for the commodities.

Like most of you gold bugs out there, you are I assume also counting every strong gold day? With that I mean the days when gold rises despite the fundamentally deplete dollar rises.

Well…I stopped counting when I got at three. To me it was sorta already obvious when I made my last gold post where this was going. UP.

Don’t be surprised if we happen to get several days of up for gold/silver and the stocks. Lots of stocks will quickly be bought and brought back to earlier highs. Also, look for lots of undervalued plays which will get some added attention from investors cause some have been severely beaten, if not butchered….would be a better word.

All that money flowing to the Venture, Toronto, AMEX,….all to the commodities….this is bound to set off some waves. There are already plenty of waves being made from different directions which indicates to me that we could also be looking at another major impact story. Something has to give you know. Just common physics.

Greece bailout, gold buying, currency issues,…either that or another sugarcoating.

HUI - Basket of Unhedged Gold Stocks (Kitco.com)

The chart with the AMEX Gold BUGS (Basket of Unhedged Gold Stocks).

This represents a portfolio of 14 major gold mining companies. The Index is designed to give investors significant exposure to near term movements in gold prices – by including companies that do not hedge their gold production beyond 1 1/2 years. (from Kitco)

HUI Index Weekly Chart

Marketclub – HUI Index Trend Analysis Marketclub - HUI Index Trend Analysis (What’s this?)

Weekly not very exciting. On this chart we haven’t even been below the 50 MA. That’s not me saying we haven’t had a considerable down but at least I am not writing here something like…luckily the 200 MA provided support…or something like that. If you know what I mean.

There was always this support level around 400. There were a couple of weeks, 2 to be correct, where it was grinding the teeth as to whether we would hold.

For now it seems we have.

I think even the bears must have gotten tired of so much down that they have given up from exhaustion.

So, my answer to the question posed in the title of this article would be…I’d say we are.

Is the HUI Index in Recovery mode?

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