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Advanced Technical Analysis - HUI

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Note: the following analysis is formulated as an assimilation of Fibonacci, DeMark, Elliott Wave and other technical indicators. It is offered as education and not intended as advice in any way.

Summary:


We're updating our June 29th Amex Gold Bugs Index (HUI) analysis for a 4th wave failure to take this index to new lows beneath the May lows. That call remains the same today; the price action off the May lows continues to evolve in an overlapping and corrective manner, highly suggestive of a counter-trend move that could eventually fail and move to new lows for the year beneath the May lows of 163 on the HUI (and XAU 77). The 4th wave corrective move up from the May lows is open to a number of interpretations from an Elliott wave perspective.

Our last note suggested a 4th triangle was possible; it still is. A simple extended zigzag is also possible (our most probable count). Either way, no matter what pattern the 4th wave triangle is taking, the conclusion is bearish: the analysis suggests it could fail eventually and move to new lows beneath the May lows. If a 4th wave zig zag is operative, any new high above the May peak at 203 could end the corrective bounce. If the C wave is equal to the A wave in the zigzag, then a good 4th wave target would be higher at 213.

Just to complicate matters further, it is still theoretically possible (though highly improbable) that the 4th wave ended in a truncated peak at the July highs. Under this scenario, the move up since the July lows has been a wave ii of wave 5 correction that will fail in the next few sessions. The Elliott wave pattern is complicated and giving several different near term conclusions. The long term conclusion however is clear: a move below the May lows is very possible. Only a move impulsively above the 213 level would cause us to abandon this bearish view for new lows beneath the May lows. For now we will be patient and await either (1) a completed 4th wave zig zag at the 213 area or (2) a minor degree "5" waves down on the hourly time frame and smaller charts in order to identify a trend change.

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No positions in stocks mentioned.

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