We look at the uptrend channel in the $HUI gold miner index $GDX $GDXJ $GG $GLD $EGO $IAG $SLW $HL
We still think the intermediate term lows are in for gold and the mining stocks. Today we examine the $HUI Gold Bugs Index on the daily chart since last fall’s lows. You can see how gold stocks have been in two rising channels (blue and black above). The blue channel is a perfect parallel channel that has lasted 12 months. This blue channel appears to be a symmetrical halfway pattern off of last fall’s lows within the larger black uptrend channel (i.e. the main channel). We are looking for a very strong move up from these levels to complete this pattern. The technical indicators on the daily chart look very bullish - especially the MACD.
Take notice of the series of small, red consolidation patterns that the index has gone through since the bottom. This is a very powerful move that took us close to the all time highs for the index at the beginning of last month. Since then, gold has been working off its overbought conditions, preparing for an assault of higher prices. We believe we are still smack in the middle of a very powerful impulse wave in gold and the stocks. Right now is still a low risk entry point with stops below the December lows as we have now finally touched the bottom of both the blue and black channels.
We have just completed a bullish falling wedge pattern - the last red pattern above. We’ve also broken out of an inverse head and shoulders pattern yesterday; both very bullish developments. This next move will be very volatile - in both directions - and should end in a near parabolic rise. Take a look at how volatile the two month move up from the Oct 2008 lows was to get an idea of what we are expecting. Remember to always trust your stops. It isn’t going to be an easy ride. The gold bull try to shake all but the strongest off.
