HUI Fractals ~ Under The Scope

I thought we might spend a bit of time, today, looking at the formation of the current HUI fractal compared to the earlier one. To do so, we will use a bit of a different look, today, using "ribbon moving average charts". These charts illustrate the relationship of many moving averages to the price movement of a stock or index. Though we will simply use a ribbon MA chart as a way to compare fractal movement in the present, these charts can be invaluable in comparing many different individual PM charts, looking for potential strength or weakness.

In the editorials of August 8 and August 15, I had suggested that if the HUI fractal were to play out exactly as the prior one, we would be looking for a drop to new lows. Yet, I had also stated that I was personally going to hold my positions and look "long" since I did not want to miss what I expect to be very large up-moves that are coming. In doing so, I presented charts suited to a "higher B wave" having caused this current fractal to be "different." Well, with the drop back down to near-new lows, the fractal is playing out, almost exactly. Let's take a look at the fractal charts………..

Please remember that I am using the term "fractal", very loosely. In fact, the whole HUI Bull move appears to be playing out as one large fractal. We are really just showing two similar segments of that larger fractal. I had hoped to show a much more comprehensive chart of the larger formation, but will have to return with those thoughts.

In this "earlier fractal segment" I have marked the similar period to today with a blue circle. In this segment, circled in blue, HUI price rallied up to the top roll of the MA ribbon chart, then re-traced back down to the bottom of the ribbon. That is what I expect to happen, again, today. In fact, I'd expect the "re-test" to come in about the time of the elections.

If we look to the right, the red arrow signifies where HUI price aggressively ran to after the re-test of the bottom of the MA ribbon. That is the coming move that I do not want to miss. Notice the cup formations that formed in this time period in the MACD and in the RSI indicators.

With the recent drop, the current fractal is playing out almost exactly as the earlier HUI fractal. In the second chart, below, we see a blue arrow, similar to that in the first chart, where I expect a rally to take the HUI price to the top of the MA ribbons to about 325. After that, I'd expect a re-trace to around 300 around the time of the elections, before a very aggressive rally to new HUI highs takes place. My expectations are for that rally to take the HUI up to around 470 at the solid blue "angled resistance line", but may spike as high as 540 as seen at the corresponding red arrow on the left of the chart. Please note: this current fractal has not been characterized by as high of spikes as the first fractal exhibited, so the more sluggish nature may render such a final spike to the run as obsolete, or it may simple not spike as high. Yet, a run up to even the HUI 470 level into March or April would be a very nice run, indeed.

Notice the similarly forming cups in the MACD and RSI indicators. Also notice the "black fork" that targets the HUI 470 area. (Thanks to "Grin" who showed this fork, earlier.) Although I believe that the HUI low is in for this correction, the HUI price did not make a slightly lower low this time. I believe that is true since the lower Bollinger Bands on the weekly chart were higher by the time that the HUI price dropped back down, supporting price at a higher level.

If we get these similar price movements in the current HUI fractal, it will suggest even more aggressively higher targets to potentially be triggered. I'll try to return this week with a chart of the full HUI fractal that is playing out in the form of a chart I call, "The HUI Stairway to Heaven." Such a chart might suggest some very aggressively bullish HUI movement all the way into April or May of 2008.

Below, is the link to the Gold-Eagle Forum where many of us discuss the various topics of the Precious Metals sector………..

www.gold-eagle.com/cgi-bin/gn/get/forum.html

Again, I'd like to thank all of the posters at the Gold-Eagle Forum for their daily input. This thank you is especially extended to TQ and to Grininbarrett. Special thanks go to Dr. Vronsky and Westerman for creating the Gold-Eagle site and for editing my work. A very special "Congratulations" go out to Dr. Vronsky and Westerman after Gold-Eagle saw its hit counter ring up 246 million this last week.

Thanks also go out to CaptainHook and David Petch of TreasureChests since I have learned so much from them. They can be found at www.treasurechests.info/index.php

There are many great editorials that can be found on the Gold-Eagle site at the following link. www.gold-eagle.com/research/petchndx.html

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