The HUI Gold Stock Index is now testing a critical area of technical support.
Back on December 11th, I talked about gold stocks forming a “W” Double Bottom here:
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=25245463
HUI Gold Stock Index
Which gave us one of the fastest index “doubles” of this entire cycle, from the HUI intra-day low of 150.27 on October 24th, to the HUI 311.35 high on December 17th, just barely missing our target of HUI 320.
This was my target “trading channel” for that move in the HUI:
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=25259480
HUI Gold Stock Index Trading Channel
After taking profits into the move into our HUI 320 target, and getting stopped out upon the break of our trading channel, I posted this initial chart below, on Dec 29th, as our expected “re-entry” target.
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=25283876
Re-Entry Target for HUI
And now the HUI is testing that expected technical re-entry target today:
HUI Gold Stock Chart January 2009 Key Technical Support
In a perfect world, the HUI after a period of expected profit taking, and a garden variety 50%ish pullback would idealy be testing critical support into a normal tape. But, today the DOW is down -270+ points.
But, that’s actually a double edged sword, because if the HUI 50 DMA can hold on a day like today, it’s just that much stronger of an indicator that the sector is going to move much higher.
On my message board at
Silicon Investor I’ve been talking about “selling Puts” as the best risk/reward way to re-enter the HUI here. And I have begun selling puts in GG, AUY, and MFN.
And with this sell off in the HUI accelerated by the DOW, I’ve begun making my “initial” re-entry buys into the common, with buys in GG sub $24, AUY sub $6, AEM in the $44’s.
Keep some powder dry… use “put sales” as your initial re-entry, but don’t be afraid to grab some shares today given the added downside from a -270 DOW day.
Set tight stops here to protect yourself if the DOW continues to collapse and takes gold shares down with it.
But, do not be afraid to step in here, even if only for a quick day trade, as we’re now getting a nice intra-day reversal off todays lows as I type.
And take a look at those “Put sales”… there’s some nice fat premiums out there right now!
Mo later,
SliderOnTheBlack
4 responses so far ↓
1 Scott // Jan 15, 2009 at 3:26 am
Hello Slider,
I’m honored to be the first to make a comment! Just wanted to say that your charts on the PM’s and oil are extremely helpful. You are never a “perma-bull” or “perma-bear” and that helps me keep a balanced approach in my own trading. Thank you very much for all the hard work you put in (market as well as political/economic research) for the benefit of “the little guy.” I’m trying hard to make a little bit of money in the markets and last year it was very hard to do it on my own. You should have your own radio talk show….it would be a huge hit.
2 SliderOnTheBlack // Jan 16, 2009 at 1:05 pm
Hello Scott,
Thanks for the kind words.
As far as never being a “perma-bull, or bear”…
why not make money in both directions?
You must learn to use volatility, or it will surely use you.
Good Luck,
SOTB
3 Scott // Jan 17, 2009 at 2:39 pm
Indeed…and you have played a BIG part in teaching me just that. I’ve managed to eek out a small gain last year by trading both directions. I feel very fortunate to that end. Also, I emailed AND faxed my congressman re: Geithner and have emailed my friends requesting that they do the same (unfortunately, I think most of them still have no clue what is going on and seriously doubt they will take the time to follow through).
Thanks again, Slider. Looking forward to having you at the helm of the ship in 2009 as you continue to navigate. I plan on using some of the profits from my trading to purchase physical gold and silver this year (I’ve never done that and I’ve actually convinced my wife it’s a good idea to do so). What would you recommend we purchase (coins or otherwise) and where would be a good place to buy it (ebay?). Any help pointing us in the right direction would be greatly appreciated!
Scott
4 Scott // Jan 17, 2009 at 3:23 pm
Hello Slider,
Here is the letter and Fax I sent to Ms. Boxer and Ms. Feinstein. I used some of your verbage in a previous post as part of my letter and I hope you don’t mind. I thought it :
Dear Ms. Feinstein,
Tim Geithner, besides being a tax cheat who got caught, is the complete and total puppet of the very people who are orchestrating the looting of the US Financial system. THIS HAS GOT TO STOP. Please try and do something to stop the confirmation of Tim Geithner so we can begin to right what is so very wrong with our country.
Perhaps David Walker as a viable alternative?
Respectfully submitted,
Scott
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