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HUI

Using HUI/VIX on weekly chart to anticipate major HUI movesHUI (Gold Bugs Index) throws signals relative to the VIX that are pretty obvious and allow plenty of time for entries and exits. I'll describe how in a minute - before that think about the aspect of Gold trading that is a "worry trade" and think about what the VIX is. As that sinks in, you realize that gold buyers are often playing a much longer time frame than the options traders who drive the VIX. So the signal mix here shouldn't surprise anyone with trading experience. The Chart - I've taken the Heiken Ashi of the ratio of HUI/VIX. The rationale for HUI/VIX? "Worry traders" - those who buy gold and those that track the VIX - aren't always the same people, but both are often hedging (or betting on) a market crash - or worse. This chart shows the ratio in the red/green candles and in the background the gray is HUI itself. The Sell Signal - I drew three horizontal lines where HUI/VIX pivots are common and pulled up the RSI (important - the Heiken Ashi is important here - it makes the RSI divergences easier to read). The signal pattern for a SELL of HUI is a bearish divergence on the HUI/VIX followed by a simultaneous spike in HUI to the top zone while the HUI/VIX moves down to the middle zone. In those cases HUI plunges shortly after. Why? I think of it as "hang time" - the gold believers are the last to give up - the VIX has moved lower and the S&P isn't showing worry anymore. Gold as a worry asset then follows suit because fewer new buyers are converted to owning Gold. The Buy Signal - Worry assets bottom when no one is worried. Yet worry is cyclical. We are very close (maybe 3 to 6 months out, IMO) from a worry low, and the chart shows it - we are sitting above the "no one is worried" pivot line, but we aren't there yet, at least according to past patterns on this weekly chart. THAT DOES NOT MEAN HUI HASN'T BOTTOMED. Sorry for the caps, but ratio charts are tricky - we can move firmly down into that bottom zone with HUI trading sideways (consolidation) and VIX dropping. I am actually expecting that very thing to happen and have linked a chart showing why I see VIX lower for 3 more months.
NYSE:HUI
by codypd
Ratio:Miners index, priced in small capsNotice how Gold is moving inversely from HUI -priced in small cap miners ETF- since Jan 2013. My view is it pays at the time being to be in well financed, little debt small company stocks. Ratio currently at the lower boundary of possible megaphone pattern, right below of the non confirmed yet H&S's neckline. All eyes in yellow box, wick tail of June 16th area, for a possible break, or failed break. Big money are being made on big failed patterns. So far, ratio follows the path of a possible bullish Butterfly. Kumo (not shown) just turn red for the first time since Dec 2010 All the best P
NYSE:HUI
by pantheo