GG, HUI, Gold - September 12, 2009

So far GG, and a host of other PM miners, have worked as per plans, from holding key support around MAs (or important levels) to recent rallies.

Last post I did some short term price range price range projection on the 60-min frame with an area between 36 and 39 to possibly hold the current correction, and said

It would be ideal if price just turned from around here and ran.

I also mentioned that the current correction looked like a double zigzag.

So far, it’s all on track – so far. If the correction in GG was truly a double zigzag, then its low should hold in the hours and days ahead. This is the part that I just sit and wait.

I won’t get myself side-tracked by short term count. Unless I am trying to do a quick in-and-out, I should keep the bigger picture in mind

So far, so good, but I shall remember that the count is split even between a very bearish and a very bullish outcome.

Weekly picture looks OK, but I think it needs a bit more strengthtening

BTW, notice the 25 area that I identified as strong support on Dec 26, 2008. It has held like a rock since January 2009.

Last time we visited HUI, I said there was some negative divergences on some breadth measures. They are still there, and that makes the group susceptible to selling and correction. Just keep that in mind

I don’t have my trusted Amibroker with me, but not to worry, I can always steal a chart from prudenttrader.com operated by my good friend Bill Zimmer

Same situation as last post. It needs a bit of improvement in McClellan group of breadth measures

This is a daily chart of GDX

It’s been outperforming GLD which is good, but it’s at a point where it must, I repeat, must maintain its outperformance against the metal.

Look at the purple arrow I have laid against the mid-channel point. Also, notice the recent volume. This, IMO, is not blow-off volume, since it is volume thrusting out of a 3-month consolidation. GDX must be able to reach the top of the channel before breaking support. Otherwise, something maybe terribly wrong somewhere. I expect either a continuation, or a consolidation and then continuation from here. That, also, is a must for GDX.

So, we have done the hard job of buying into PMs and some miners during the boring, and uncertain period of sideways action and support retest. Now, it’s the exciting time of mass participation, and bubble vision attention. This is when I get to think about trailing stops, partial profit targets, and a variety of option plays to make sure that, at the very least, I do not lose if I am forced out by the market.

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On the crazy front of bubble visions and bubble heads, there are opinions of all sorts. Some say Barrick’s hedge book dilemma is the beginning of a massive run for gold. Some say it is the top. If Barrick’s situation is as dire as is suggested by some, and if Barrick is part of a cartel that tries to suppress the price of gold as claimed by some, and if physical gold really suffers low supply and high demand, then, barrack and its cohorts may try to short the hell out of gold in the future market. Big ifs – really big ifs. Should be an interesting week for Gold.

Regardless of who says what, I shall remain focused on my charts.

Remember this chart

If it is a successful breakout, it should go.

Pick you own levels, plan your own play, be the master of your own trade!