Buy signal triggered, but is this a trap?
Posted by Frugal on April 11th, 2008
My trading model just triggered a buy signal on HUI index at the Thursday closing. Going all the way back to 1996, this signal is only right about 60% of the time, but has performed well through the bear market from 1996 to 2001, and the bull market from 2001 till now.
But I still hesitate to take further positions. I don’t know whether the model is correct, or Bob Hoye is correct. I would be comfortable buying if gold makes a low at or below $850, with HUI going all the way down at 370 to 400 (or below). The current correction seems to be a little shallow, and has simply not corrected the overbought technical indicators on the monthly readings.
But again, I also believe that we were in the Elliot wave 2 of 3. Supposedly the corrections are shallow in intermediate wave 3.
Trade on your own risk. Best luck.
Frugal at 1stMillionAt33.com
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April 11th, 2008 at 1:30 pm
$HUI down 2.44% today to 441. DGP down 1% not so bad - still a hold. For me the magic support level is $HUI 425. If we get down there let’s see how it acts. If it drops below - I’m out. A break of 420 and I short gold via the DZZ.