HUI hammered
Posted by Frugal on April 30th, 2008
PM sector is getting hammered yesterday. The MACD is way oversold. It’s possible that the low will be around 370.
According to my own model, if the average value of HUI is roughly 390 for the next 12 days, it will trigger a buy signal. What this means is that the nightmare that seems to be forever for PM should “temporarily” be over in another 2.5 weeks. And the low may not be in yet.
The timeframe is right around the next option expiry date.
From the physical markets, the panic is slowly sinking in for sure. From the top of $1030 till now, the number of ounces in GLD has decreased by about 10%, or by roughly 60 to 65 million ounces to 580 million ounces. Long term holders have liquidated by about 5% in my estimate. Gold price is making new low, while silver is marginally making new low. While there may be another 10% potentially to go on the downside, that should be pretty much it.
In any case, for the intermediate term, PM markets are unlikely to rise a lot. Especially given a overbought commodity market, which in most likelihood, will drag down the entire commodity/PM complex, when grains start to turn south. That means in the next buy signal for PM, one should trade it only.
Best luck.
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April 30th, 2008 at 4:49 pm
HUI 375 is strong multi-year support. Just do not see a break below that this go around. More importantly is the 425 level. If we kiss that and then reverse lower - could be bad news. I’ll be watching for the kiss and will be ready with DZZ should it happen. Hope it doesn’t happen as I am longer term bullish on gold. Out of gold at this time until a clearer picture emerges.