HUI Gold Bugs Index Fighting With Resistance Area

by Olivier on October 26, 2010

Here’s an update of my thoughts on the monthly HUI versus the price of Gold comparison chart. The divergence is still obvious when you look at the chart. The big cap gold miners are still not breaking out, on the other hand junior gold miners like the ones that are part of the GDXJ – Junior Gold Miner ETF have much better looking charts. I redrew the chart of the HUI – Gold Bugs Index (‘Basket Of Unhedged Gold Stocks’ sometimes also referred to as ‘Basically Unhedged Gold Stocks’) to better reflect the idea of a Resistance Area.

Most of the time resistance should not be considered a clearly defined price level. Viewing resistance as a price area is the smarter way to look at charts. As I consider the resistance for the HUI to be more of an area I expect the chart will need more time to set up for a break out to the upside. As I outlined in my chart annotations, click here for the

technically speaking the most bullish outcome would be prices breaking out to the upside. Then a retest of that price area would turn former resistance into support. That would be a textbook example respecting classic technical analysis principles. We are not there yet. The big caps are still significantly lagging the price of gold. The more aggressive junior gold miners and exploration plays like AUMN – Golden Minerals are acting much better. As resistance is a price area it could still end up rejecting prices. The charts will guide us.

Recent Sector Overview chart additions and updates:

The best way to fill time is to waste it. – Marguerite Duras

My public list with all my charts can be viewed here:

Buenas noches!

Previous post:

Next post: