The HUI ended higher 3.91 (1.96%) with a CLOSE at 203.41. On the daily chart, the fast stochastic has a positive crossover and is rising out of oversold territory and thus no longer embedded. The slow stochastic has positive crossover but remains embedded in oversold territory. MACD is rising but maintains its negative crossover of a descending Signal line. Divergence is rising but remains below the zero mark.
GLD ended higher $1.29 (1.05%) with a CLOSE at 124.53. On the daily chart, the fast stochastic has a positive crossover and is rising out of oversold territory and thus no longer embedded. The slow stochastic has positive crossover but remains embedded in oversold territory. MACD is rising but maintains its negative crossover of a descending Signal line. Divergence is rising but remains below the zero mark.
SLV ended higher $0.16 (1.0%) with a CLOSE at 16.21. On the daily chart, the fast stochastic has a positive crossover and is rising out of oversold territory. The slow stochastic has a very very small positive crossover but remains embedded in oversold territory. MACD is rising but maintains its negative crossover of a descending Signal line. Divergence is rising but remains below the zero mark.
The main purpose of this blog is to demonstrate that the HUI trades in an orderly fashion both in "price" and "time". I publish daily target numbers well in advance to demonstrate the orderly fashion in which the HUI moves. If the HIGH, LOW or CLOSE is within 0.50 points of a daily target number it is a "hit". Below are the daily Bear target numbers for "The Fall", first published several weeks ago:
207.50
204.16
201.16
198.81
194.82
188.53
182.11
178.25
Today the HUI traded between two of the target numbers. The LOW of the day at 198.34 (-0.47 points) was a hit of the Bear target number of 198.81. The LOW came early in the session, and the HUI traded up into the HIGH of the day at 203.78 (-0.38 points) a hit of the Bear target number of 204.16. Another demonstration of how orderly this market trades. The 198.81 level acted as perfect support and reversed the downward move in the HUI. The 204.16 level acted as resistance and forced the HUI down into the Close of 203.41. Something to ponder when you get financial advise from those who claim the market is rigged and manipulated or worse from people who claim that there is a random walk in the market that is simply chaos in motion.
On Friday I posted the following: "For Monday, look for the Bulls to mount a counter trend rally. Be very careful, in a counter trend rally will only last 1-3 days. In fact today's action might be counted as day one. If the Bulls can take out today's HIGH the next targets are 204.16 and 207.50. If the Bulls can manage to hit the 207.50 level it would also fill the "gap" at 206.01 that formed on September 15th." Pretty much sums up much of what happened today. The bulls managed to achieve the first goal of taking the HUI to the 204.16 level. Perhaps tomorrow the bulls will finish the second goal of 207.50 and the filling of the gap.
The working theory is that the HUI is in "The Fall" and the trend changed back on September 7th. "The Fall" will continue until a significant LOW is posted in the HUI between December 6th and December 28th. This is the working theory until proven otherwise. The Bulls are in the midst of testing this theory. The HUI is terribly oversold and in need of a counter rally. This rally will either destroy "The Fall" theory by ultimately carrying the HUI above the last HIGH of 220 or confirm "The Fall" theory by falling short and resetting the HUI for an additional downside move.
For tomorrow look for the Bulls to take out today's HIGH and reach the 207.50 level and fill "the gap". Today, the HUI posted an outside bar to the upside. Outside bars need to be respected as they indicate that the market wants to move. For the Bears, an inside bar would be great, delaying and confounding any bullish impulses. If the Bears can take out today's LOW the next stop is 194.82.
I am no longer neutral, I am currently long. If this is a counter trend rally then it will only last 1-3 days. I mentioned on Friday, that this move may have already started. For the sake of "safe" trading I will count today as day two. My plan is to exit most of my longs as the HUI approaches the 207.50. Stop loss is set at today's low. I will also be keeping an eye on the slow stochastic. If it gapes out of oversold position, I might keep a small portion of the long trade to see how close the bulls can get to the gap at 214.94 that formed on September 8th.
GLD and SLV both posted outside bars to the upside. SLV has a "gap" at 16.61 and GLD has a "gap" at 125.41, look for the Bulls to fill both of these in the next one or two sessions. All of this is just for trading at this juncture not a time of buy and hold.
If "The Fall" is proven correct, serious consideration and thought needs to be given about whether to hold long positions for any duration of time.
These are just my thoughts and observations not advice etc. Please feel free to share yours.
As for Tuesday, good luck and happy hunting.