A Little HUI On The Side

I've been waiting to drop this on you. Trying to be patient. Finally I think its time.

The primary index of mining shares is known as the HUI, or "The Gold Bugs Index". (There's that name again.) Though the index has been in a sustained uptrend, it has its peaks and valleys. The key to trading the miners is to invest and unvest and highs and lows. Not an easy task but not necessarily impossible, either. I've been watching the HUI since the selloff that started two weeks ago, waiting and wondering if it would reach down near the primary trendline., near the 510 level Well, guess what? It has. Tonight, the index sits at 517.43.

Isn't this an interesting chart. Almost all the classic TA formations are here. H&S tops, double tops, double bottoms, rising wedges...just about anything you want to see you can find it on this chart.
Now, look very closely. In May and June of last year, you got an almost perfect double-top. This was followed by a correction back to the primary trendline at about 435. From there, the index rallied almost 35% over the next four months! Now note the almost perfect H&S top from early November to late December and, most importantly, note that we have now pulled back almost entirely to the primary trendline again, near the 510 level.

So, here's the deal, its time to aggressively buy the miner's again. Period. Only if the index continues downward and closes below 480 would I stop myself back out. Until then, buy with both hands. Buy what, you ask? Well, my opinion has not changed on any of my five favorites. You can find them here as well as picks in other areas: http://tfmetalsreport.blogspot.com/2010/11/this-might-take-minute.html
Actually, you should take a minute to read the entire post from late November. Note how the USDX was at 81 then yet gold was higher than it is tonight. Hmmmm. Nah, there's no manipulation in the gold pit. Anyway, I digress.
Let's revisit my Fab Five and maybe pick some price entry points for tomorrow, later this week or whenever you are comfortable taking the plunge.

EGO: Anywhere around or under $17, it would appear to be a steal. Stop below 16.50.
http://finance.yahoo.com/q?s=EGO

TRE: If you can get it at $6.50 or less, I think you'll make money.
http://finance.yahoo.com/q?s=TRE&ql=1

NG: $13.50-14.00 is a great price and its a possible takeover candidate, too.
http://finance.yahoo.com/q?s=ng&ql=1

SVM: Came down rather dramatically, mainly because of a secondary offering. I've been waiting for the chance to buy it near $10.50.
http://finance.yahoo.com/q?s=SVM

EXK: My personal favorite. Do your own research and I think you'll agree. At $6, its a great buy. At $6.50, its a great buy. At $7, its a great buy...
http://finance.yahoo.com/q?s=EXK

Lastly, I would be remiss if I didn't offer you another chart of the USDX. Again, here's the long-term, 12-hour chart I posted a few hours ago:

Now look at the short-term, 1-hour chart. Looks pretty dismal but also looks like we'll soon find out if its headed significantly lower or if its going to rebound.

Recent history would suggest a rebound. Some manufactured "news" of more EU contagion or some such. But we'll see. A move down through 78.40 would set off a bunch of stops and we could reach all the way down to 77 before stabilizing. Watch this very closely.
And here is Trader Dan discussing many of the very same issues we've been following today. He even touches upon the HUI. As usual, its a must read: http://jsmineset.com/2011/01/19/trader-dan-comments-on-todays-sobering-dollar-action-2/

I'll post more later if conditions warrant. Turd out.