Back to Support

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Interesting that it took us only six days for $HUI to move back to support and re-test the lows of the other day.  Interesting as well that the miners held support despite the lower values of both underlying metals (Silver and Gold).

Let’s have a look at that chart again:

Let’s not quibble, here… we again stand on the edge of the knife.  Note how close we are to a 50-200-day EMA cross over. That would not be a good sign for anyone, and we are going to need a heck of a rally to pull those two nearing lovers apart again. RSI continues in our favor– if only moderately so — even as the slow stochastic is pointed firmly in a southerly direction.

I’m not going to vacillate here.  We should be ready to cut our positions to where we are comfortable with another 50 point southerly move in the $HUI. If we break support at $494-5 or so, then I think we will be headed that way.

All that said, today’s postive divergence action in the miners may indicate at least a short term bottoming in the downward action.  Our trusty negative ETF for silver — ZSL — has registerd three “overbought” days in a row on The PPT.  This is unprecedented in the history of The PPT, albeit a relatively short data set.  We also saw the iShares Gold ETF (IAU) show up on the Wall Street Journal’s Buying on Weakness charts, along with both GG and SLW — two very popular miners in gold and silver.  All of these indicate an appetite for miners that may be setting aside the current fluctuations in the underlying metal.

What’s apparent, however, is that we will know very soon what direction we are going in.   We cannot remain at the support level forever.  We shall either fail here, or make another attempt at the 200-day EMA.   The action from there will determine our more intermediate term prospects.

Keep an eye on the Dollar Index.  It looked sickly again today, and if it breaks down through that $75.20 support, we may have “game on” once again in the shiny metal sector.

God bless.

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