HUI Weekly Chart…In Detail

Maybe a little too much detail, as the TA novelty known as the Andrews Fork makes an appearance. But here is the story that the bigger picture weekly view of the HUI Gold Bugs index wants to tell.

• The bull market began in 2016 with a ruthless downside shakeout and reversal.

• That 2016 impulse higher soon became compromised fundamentally, as we noted at the time.

• Within a couple months that was that, the end of the rally and the beginning of an agonizing 2 year consolidation.

• The consolidation was broken to the upside in early 2019. That breakout was followed by another shakeout (classic precious metals action) to kill the bugs’ spirits, and then came the launch leg of this phase of the bull that would go on to become apparent to the mainstream.

• The COVID-crash in early 2020 was actually an elastic band, a slingshot if you will. The market over reacted to the downside, got a bunch of pesky gaps filled and then tore ass toward our target, established in 2019.

• A second flag consolidation is being built right from that target of 375 (HUI hit 373.85, but it’s close enough for government work), as noted in this August, 2019 online (abbreviated) edition of NFTRH and several other updates and posts last year. You may recall the monthly chart’s thick lateral resistance at that area. Huey always was going to at least pause at that point.

• I am favoring further near-term pullback on the gold stocks based on daily charts and certain macro indicators. But that is short-term stuff…

• This weekly chart advises not to be too over confident in a bear case as the flag has already done good work in grinding Huey down to the EMA 20, which contained the last pullback. But until prices break certain shorter-term resistance levels on the daily chart the corrective consolidation grinds on.

• Not so subtle hint: the top tine of the Fork roughly coincides with the daily chart’s best objective, which would hold a key higher low and macro willing, set the sector up for the next phase.

• I cannot stress enough how important it will be to follow the macro indicators that matter, not the multitudes blathering on about inflation, as if that is a major consideration for gold stocks. If these indicators hold up the current grinding consolidation process will be seen in hindsight as a significant buying opportunity.

• The NFTRH service will be tracking the index and individual miners every step of the way by both short and long-term technical views and of course, the fundamentals backing those views. One day Huey should be seen pushing his cart of rocks out of the dark, into the light and up to the sky at an altitude above 375.

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