HUI-Goldstock Price/Volume Action/China Re-Peg ?
Well HUI 200ish seems to have gotten a bit "stickier" here from the recent market events of late.
COT numbers showed that the Commercials have significantly reduced their short position in Gold (whodathunkit ?).
We got the Chinese Re-Peg we've been waiting for...which of course, will ultimately carry exponentially more ramifications than merely a currency revaluation and the Gold Pundits are signaling this as a Watershed event for Gold Bulls.
...so given all of the above - why no volume, why no rally ?
First; I think the Gold Funds and the Individual Investors who possessed Cash during the April & May washout in goldstocks -put it to use then.
The positive here, is that selling seems to have exhausted itself at this level and that's a necessary prerequisite to form a base, from which to launch the next move onward & upward for goldstocks.
But, the question still then remains...what's going to fuel the move ?
In my opinion - here is how the rally will unfold:
1. The "perfect storm" of an Extreme Short Position in Gold from the Commercials and an Extreme Long Position in the USD from the Spec's....is starting to unwind.
2. The Fundamentally good news of the China Re-Peg has rightfully reinvigorated the Gold Pundit Community and that should bring in a fresh flow of Cash to the Gold Funds.
- the major caveat to that being; that the Goldstocks must compete with their Natural Resource brethern in the Oil Sector - that are hitting new Index Highs.... a tough act to not only follow, but to have to compete for funds with as well.
3. Technically, we badly need a print above Gold's 200 dma at $429.86 and for the HUI to clear it's 200 dma hurdle at 206.76 as well..... WE ARE VERY CLOSE... step by step, inch by inch, tick by tick.
Merely a slow & steady coninuation of the unwinding of the Gold Short by the Commercials and the Long USD position by the Spec's should get us there any day....1 Good Day and we're there !
Once we make that dual print over the 200 dma... then the inflows of Fresh Cash to the Gold Funds from the encouraging news of the China Re-Peg should be enough to light the fuse of a technical breakout for Gold and the Goldstocks.
...one final caveat and trading thought:
The Powers that be in the Global Markets want an orderly and controlled, managed & measured reaction to the Re-Peg... they certainly do not want the headlines within a couple of weeks of the China Re-Peg to read:
* GOLD HIT's NEW HIGHS ! *
...so we can probably expect Gold to get hammered for just that reason again... right at the prior resistance levels of $437, $443 & $447. If Gold can break thru that initial resistance at $437 - I think we'll be looking at HUI 225ish.
For those that played this washout of sentiment & shareprices correctly into the bottom of late April & early May...you re-entered at HUI 165-175...and may find yourself sitting on 50-60 HUI Index Points and 30%-50% gains on many stocks.
- that's 4+ years of Top Returns for the average Mutual Fund in this environment.... don't give it back. I think Traders need to anticipate taking & locking in some gains into strength at those levels and perhaps utilizing tighter stops than normal... as I think the Re-Peg both brings us longterm wind beneath our golden wings... but, will also will bring a very concerted effort to control the market reaction to it... and the message transmitted by "New Highs in Gold" - is NOT the message this market wants transmitted.
...so ANTICIPATE very strong intervention on the Gold Price once again at $437, $443, $447... they WILL defend that line.
Don't find yourself REACTING to it.
I think a couple more TIC reports showing declining foreign interest ...will launch the major breakout later this Fall/Winter.
It will take some time... I do not think it will happen on this move....as it is simply too important for the shifts & rebalancing in the market from China's RePeg to be controlled, measured and orderly.
Let's get PAID on these hard earned 50-60 HUI points that are coming up.
Anticipate...that resistance and why it will be as strong, if not stronger - than anything we've ever seen.
When, not if... it will happen and we'll see a succession of Headlines reading:
Gold hits New Highs ~
- followed by:
Gold breaks $500 ~
US Dollar Tumbles...
$529 Gold, $550 Gold... |
