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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Stocks HUI Index Forecast Uptrend Into December

Commodities / Gold & Silver Stocks Oct 05, 2009 - 09:49 AM GMT

By: David_Petch

Commodities

Best Financial Markets Analysis ArticleThe daily chart of the HUI is shown below, with the lower 21 MA Bollinger band near the index, suggestive that further downside in the HUI. Upper 34 and 55 MA Bollinger bands are still going sideways, suggestive that a top was put in place. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 2 and 3. Based upon extrapolation of the %K in stochastics 1 and 2, expect another 2-3 weeks of downside at a minimum before a bottom is put in place. The anticipated level of support is at 340-345.


Figure 1

The weekly chart of the HUI is shown below, with the lower 55 MA Bollinger band starting to curl up, suggestive that a top is in place or is looming. Upper 21 and 34 MA BB’s are at the top of the index, so if further downside occurs, an Orthodox top would have been put in place (An Orthodox top refers to the highest value for the top). Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in all three instances. Although stochastics 1 and 2 are set for a decline, watch for the %K in stochastic 3 to fall beneath the %D as this will indicate that a top has been put in place. As Figure 4 suggests, the topping action of the HUI is likely to persist for a longer period of time.

Figure 2

The monthly chart of the HUI is shown below, with the lower 21 and 34 MA Bollinger bands well beneath the index, suggestive that the 2008 lows will hold. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in stochastic 1 and beneath the %D in 2 and 3. All three upper Bollinger bands continue to go sideways between 490 and 515, indicating strong overhead resistance. Based upon the spacing between the upper and lower BB’s, the corrective sequence likely has another 8-12 months at a minimum.

Figure 3

The mid-term Elliott Wave count of the HUI is shown below (updated count), with the thought pattern forming denoted in green. T he former count extended beyond allowable timelines so a change was required. The thought pattern forming, with a diametric triangle thought to be forming for wave (B). If the pattern holds true, expect a decline to around 350 to 360 before bouncing higher in wave G.  Wave G should at least test the former high from wave E, but it is important to note that should the HUI close for two days below 350, expect the decline phase to continue to the 300 level.

Figure 4

The long-term Elliott Wave count of the HUI is shown below, with the thought pattern forming denoted in green (added back in May 2009). Although the decline is about 3 to 4 weeks behind from what is shown in the chart, expect upside to last into December before topping out.

Figure 5

When the HUI bottoms towards the end of this month, a potential trade exists, which will be followed over the course of the coming weeks.
That is all for today. I will update the Horizon Beta funds tomorrow AM, including the HMU and HMD at the request of someone.

That is all for now…I will update the Horizon Beta funds early tomorrow AM and post an update of gold in the evening. Have a great day and enjoy the last few nice days of summer???  before fall really sets in

By David Petch

http://www.treasurechests.info

I generally try to write at least one editorial per week, although typically not as long as this one. At www.treasurechests.info , once per week (with updates if required), I track the Amex Gold BUGS Index, AMEX Oil Index, US Dollar Index, 10 Year US Treasury Index and the S&P 500 Index using various forms of technical analysis, including Elliott Wave. Captain Hook the site proprietor writes 2-3 articles per week on the “big picture” by tying in recent market action with numerous index ratios, money supply, COT positions etc. We also cover some 60 plus stocks in the precious metals, energy and base metals categories (with a focus on stocks around our provinces).

With the above being just one example of how we go about identifying value for investors, if this is the kind of analysis you are looking for we invite you to visit our site and discover more about how our service can further aid in achieving your financial goals. In this regard, whether it's top down macro-analysis designed to assist in opinion shaping and investment policy, or analysis on specific opportunities in the precious metals and energy sectors believed to possess exceptional value, like mindedly at Treasure Chests we in turn strive to provide the best value possible. So again, pay us a visit and discover why a small investment on your part could pay you handsome rewards in the not too distant future.

And of course if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these items.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

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