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Category Archives: HUI

HUI Gold Stock Index Review


At this time I’m trying a different wave count for the 4-5 year, HUI bear market. If I constantly start having to use the smallest degree on my list of 15 degree levels, then I know I may have to increase my degree level by at least one degree. I still have three degree levels left, so there is lots of room to extend with.

What I see in the HUI is a potential running flat. There is some downside wiggling room left, but in the long run this gold stock bull market is not finished. A running flat is extremely bullish and from its base it can soar in a stunning fashion.

At the 2016 bear market low, the majority of analysts were bearish. When the consensus is bearish, and the forecasts for conditions to get worse are constantly hammered home, then ask yourself, “Who is left to get out”?

The reverse happens at any major top. When the consensus of expert analysts, paint us a rosy picture for the future of gold stocks, Ask yourself, again”Who is left to get in and buy”?  At a bull market top, you have analysts shouting to the rest of the world how great the gold stock bull market is going to be. Yet the HUI crashed and burned for close to 5 years.

My saying I like to use is, “market bottoms are the breeding grounds for bull markets, and bull markets are the breeding grounds of bear markets”.

My point is that the resource markets are cyclical and if you ignore this fact, you will miss every bull market that comes along.

Rick Rule – Resources: Bear Markets are the Authors of Bull Markets – YouTube

Rick Rule understands the cycles in the gold markets, and this short 10 minute video is important to watch.

Right now the Gold/HUI ratio sits at 7.10:1 from a base of 10:1. We would have to get closer to 3:1 before it starts to get very expensive.

At this time 2018 sure looks like it could be a banner year for gold related assets.

HUI, 2000-2017 Gold Stock Review

 

Many of the other gold stocks related ETFs and indices have very different wave counts. Some look more bullish while others look far more bearish. This is what diagonal wave structures can do.  The 2008 crash was not a surprise event as Steven Jon Kaplan had short positions on GDX and I tried shorting GDX as well, but got forced out several times before I gave up.  The 2008 crash showed that gold stocks “AND” the general stock markets can crash together, at least for a short period of time.

The angle of the 2008 crash assured the contrarians that another bullish phase would happen. The HUI took its sweet time about it because it sure looked like another zigzag in a bullish phase. Gold stock insiders were selling again at the 2011 top, while stock market insiders were buying across all indices that I cover. 

Sure enough, by the 2011 top the stock mania was ready to fly as gold stocks imploded in a long 4 year bear market. From the 2011 top which I use as a Cycle degree wave 3 position, the gold stock markets displayed what looks like a set of 5 waves down. Due to the diagonal nature of the decline, there could be a single zigzag during the 2013 sideways correction. 

In early 2016 the HUI hit a bottom with about a 10:1 Gold/Hui ratio from an expensive ratio of 3:1. Today the Gold/Hui ratio is 6.45:1 which is shifting a bit towards the expensive side, but it will take much more than that to kill this gold stock bull market. Not until we see a sustained expensive Gold/Hui ratio and reports of gold stock insiders selling again, will this bullish phase be ready to pop one more time. 

Even now gold stocks are not displaying a great looking potential “C” wave bull market, so we have to expect some wild moves that may surprise us. 

I show three trend lines,  and the peak of the center trend line could be closer to reality than the top trend line is.  Technically speaking, I would love to see that 2016 HUI top,  get completely retraced. It is one of the ways that will help confirm that we are still in a bullish phase correction. 

HUI Gold Stock Review

I looked over the Barron’s gold index before I looked at the HUI. They both do not give me any great clues as to the potential location we may be at. That 2016 low was a major low as all the gold/ratios have confirmed. The 2011 to 2016 gold stock bear market fits into a 5 wave sequence better than any other sequence, so it can put us into a potentially large degree zigzag. It would also mean that no new record high can happen as zigzags cannot go above their starting point, of the correction.

I’m not happy with the HUI pattern between the February 2017 top, to the July 2017 bottom. It does not fit well into a wave 2 correction at this time. Worst case we could be heading up a “C” wave leg, which cannot break out into new record highs. Instead of a 1-2 wave count we could be in an “ABC” count just as easily. Any trend lines that I do have are there to try and box the pattern in, but at times that works about as well as trying to lock a herd of angry cattle, into a corral.

There are at least 3 other gold stock related ETFs with this same type of a pattern. In the long run I’m bullish as any Gold ratios are not anywhere near any extreme at this time. Besides, no gold stock insiders as a group has sold out, besides Steven Jon Kaplan would be one of the first to post this information when it happens. Insiders do not buy their own stocks back on a whim, nor do they ever sell on a whim. They will hold for many years if they have to, and our wave counts should never conflict with this information.

One contrarian indicator I use is the Gold/Hui ratio, which is sitting at 6.23:1 right now. Very cheap was 10:1 with very expensive being closer to 3:1. At present this does not tell us that a sudden HUI crash is going to happen any time soon. Besides, only the late comers that take big positions, will get burned if that were to happen.

HUI Gold Stock Bullish Review

I have to give readers a small warning about the wave count above, as it is a very bearish wave count in the long term, but still very bullish in the short term. All other gold stock ETFs have different wave counts between each other as well, so this creates many different scenarios. 

If this market is a potential zigzag, then the HUI must not travel to new record highs, but must stop short of any August, 2016 peak. This wave count could easily fail by charging through the August peak. I have seen other wave patterns like this, where the market soared. When we look at the Gold/Hui ratio we are not near any potential overbought condition or expensive to gold.

The ratio is 6.52:1, up from the cheap side of about 11:1. It would have to travel towards 3:1 before gold stocks become expensive when compared to gold. We are still a long way away from any extreme Gold/Hui ratio, so this HUI could be sending the wrong signals. 

Even SIL has the same pattern, but with a much longer looking wedge. Unless I hear that Steven Jon Kaplan turns very bearish on gold stocks and sells all his gold stock positions, I will remain bullish. He will not even warn you about selling anything, the orders will go out to his members in email, and they will execute their sell orders at the same time.  

I have a contrarian friend that would also turn very bearish as he has been a True Contrarian subscriber for many years. If the real wave action starts to deviate away from the bigger bearish scenario, then that is a good sign.

As a disclaimer, when I talk about any gold stock wave count, they should not be used as a buying signal or any buying investment advice, as I’m not a registered investment advisor. I consult with people that have the desire to better understand the Elliott Wave Principle (EWP) from a long wave perspective.

Some gold related funds like CA: PME, which I have a small position in, is even paying out $5 CAD per month on 200 shares.

HUI Gold Stock Index Review

Gold stocks have not performed as well as gold itself, but notice that gold stocks never corrected as much as gold did recently.  

The HUI bottomed in early 2016, and then blasted up, in what can be counted as a single wave 1-2 as well. Markets have a tendency to fool as many wave counters as they can and the same wave pattern could turn into a diagonal zigzag 5th wave.  Could a zigzag carry gold stocks to new record highs? They sure can but generally they end up being rather weak overall. 

The Gold/Hui ratio, which the contrarians use will help us decide when the time is near. Bull markets don’t end when they are pointing down, as they always end with a last euphoric move to the upside. Will it be an even zigzag once it becomes more obvious? I doubt it as even zigzags are a rarity and not the norm.  Sometimes they come out even but then the zigzag will alternate, between the A5 and C5 waves.   They will change in physical size as well, which at times is hard to imagine when counting waves. 

In the case of the HUI index, the C5 wave has a much bigger physical wave structure than the A5 wave, so this fits into a bigger zigzag as well. 

With a potential 4th wave bottom in early 2016, it will give the bullish phase lots of room to travel higher, but we also have to be aware that a “D” wave may also still be in effect. Again, we have lots of time for this to happen and my favorite contrarian would have to turn very bearish on gold stocks as well. 

HUI, Gold Stock Bull Market Review

 

 

The HUI will give us a pretty good general idea about the gold stock bull market. The GDX ETF also reflects the HUI very well. From the early 2016 bottom the HUI exploded in a wild ride up until about August 2016, before it imploded again down into  the December 2016 bottom.  I believe that this was just a correction, in an ongoing bull market that still has two major legs up to go. Waves 3 and 5 of a diagonal “C” wave.  This should take the HUI well above any bull market highs, even though it could be a “D” wave bull market.

Wave 1 and two in Minor degree have already completed, so gold stocks should have no problem in clearing the wave 1 peak in Minor degree and the “A” wave peak in Intermediate degree. Somewhere along this path I’m sure we will get extensions and vertical moves, that the majority could not even imagine could happen. “C” wave bull markets are notorious for doing just that, and time will be the biggest factor, to make it come true.  

We may just be, at the first wave in Minuette degree, so we have a long way to go. The Gold/Hui ratio is still in the middle of two extremes, and with a bigger number with the HUI, the ratio moves at a snails pace. Very expensive was about 3:1 and today this ratio is at about 6.29:1.

When the entire gold stock bull market has extremely bullish news with it, and when the 5th wave completes, then it will be important to see what the Gold/Hui ratio is at.  The Gold/Hui ratio is just one contrarian indicator, as insider selling will be another.  All other gold stock ratios will also show us ratios to the extreme expensive side. Until then, this bull market is alive and well. 

When we do get closer to another extreme,  I will increase my ratio calculations as now I may just do it once a month or so.  

HUI Gold Stock Review: 2003-2017

 

 

The HUI is the mainstay of all gold stocks, and most of all the other US priced gold stock ETFs, will act much the same. The bull market leading up to the 2011 peak can only fit as a diagonal 5th wave, and even then I can still make adjustments for a better fit. At the 2011 peak my Cycle degree wave III can fit very well at this time.

Of course, then the 2011 Stock Maina started to kick in, which killed the golden bull. The bullish mood in 2011 was unprecedented as the major reversal caught all the bullish experts by surprise. If you haven’t figured this out yet, the markets will always act this way, as they will never let the majority win. It is also mathematically impossible for the majority to win money from the majority.

In a bull market the majority always seems to be winning, but their profits are always left on paper. Paper profits are never real, when they are not converted to useful cash.

Buying stuff based on the wealth effect will eventually crush us all, as we would be buying with unrealized paper gains.

In the end the HUI is acting much like all the other gold stock related ETFs, but it never hurts to keep an eye on all of them. I can’t track them in detail as much as I would like, as I’m maxed out on how many asset classes I can cover.

I may track well over 13 ratios, but the most important ones must be measured at the extremes. This week the Gold/Hui ratio calculated at 5.75:1  which does not change as dramatically as other ratios do.  When the Gold/Hui ratio strikes near 3:1 again, then we have a very expensive ratio, which may be accompanied by insider selling.  Until then, this gold stock bull market is alive and kicking, which most of the mainstream experts, have still ignored at this time.

Chances are good when the talking heads jump on the gold bandwagon, and the news blogs are all bullish on gold, then gold stocks will be ready to crash or correct. The markets will never allow the late comers to make any profits as they will lose even in a bull market.  Leaving 170% gains on the table is not an option for the real contrarians, which the HUI has done once already.

Gold Stocks HUI Bull Market Review

 

 

Finally gold stocks have made a convincing reversal, but it looks like a mini correction is in progress.  Any “B” wave bottom can produce a “C” wave bullish phase that can be very dramatic ones it starts to play out.  This “C” wave should have no problem with exceeding or retracing its entire decline from mid December 2016.  From this point forward, gold stocks will become more expensive, and only the trend chasers will jump on this bullish bandwagon.   The HUI did not decline as much as other gold stock indices or ETFs, but that is to be expected and really does not matter that much. What matters is that we understand that a correction has taken place, and when that happens, we know that gold stocks must push higher in another leg up.

This should continue well into the  spring or late spring of 2017.  We are witnessing a stock rotation alright, but they got the assets wrong that they are going to rotate into.  

While the majority were dumping  gold stocks out of fear, the contrarians ETF orders were kicking in.  They have been buyers all the way down in 2015, but they never buy all their positions at once.  They buy positions with many sets of GTC Ladder Of Orders which Steven Jon Kaplan has written in detail to me and his news letter followers. I also have a friend I visit that has worked extremely hard in the last 5 or more years, at becoming a contrarian as it does not happen overnight.  

Any Elliott wave analysis is seriously lacking all the indicators  that the contrarians have accumulated in many decades of research and practice. My effort is to use the best that contrarians have to offer, and apply them to all my wave counting positions.  Elliott wave has to confirm what the contrarians are doing, and will do,  not what the wild emotional traders or investors are doing.  Missing a major gold stock bull market is not an option for the well seasoned contrarians in this world. 

My futures chart server has been down this morning, so it may take some time before I can post my gold wave counts. 

As of today Elliott Wave 5.0 is on track to hit over 25,000 pages read this month, which breaks all records from all my blogs I have ever started.  Thanks for your contribution in achieving this amazing result. 

 

HUI, Gold Stocks Review

 

hui-nov-15-2016

 

The way the HUI has declined, you would figure that it was going south all the way. Of course, that’s what the markets want you to think as the markets want to shake off anyone riding this gold bull, that bought high this summer.  Choosing a bull market is what will get investors burnt, as they always buy high and then sell low in disgust, when the asset class starts to go down. 

The majority buys on the way up, very few buy, on the way down, like the contrarians did in 2015. Even in the summer of 2013, gold stock insiders (contrarians) were going on a buying rampage, that convinced me that a major bottom was near.

The HUI decline is also another great example that retracement ratios don’t work in general.  Waves are never, ever even acting patterns so retracement levels are always changing.  Are there any bullish gold stock analysts that are screaming that a 60% retracement is complete, and that it is time to buy gold stocks? 

Sure gold stocks can go lower at any time, so there is always a downside risk. We are at about a 61% net retracement right now, and the HUI is poking the lower parallel trend line.  We should at least see a rally that can break the top trend line, but we have already run long enough for a Minor degree correction to have completed. 

One of the great indicators I use is the Gold/Hui ratio, which gives us an objective view, how cheap or expensive gold stocks are, when compared to the cash price of gold.  At a minimum, we need two readings, one from a major top, and one from a major bottom. This will give us the outside parameters, close enough to give us something to work with. 

Today this Gold/Hui ratio sits at 6.6:1 from an oversold base of 10:1. The 3:1 ratio was the ratio at the top of the gold stock market in 2011.  Once a real extreme ratio has been established, then rarely does that low get breached once the new bullish cycle starts.  Contrarians know these ratios very well and I started using them as well. The majority never uses these types of indicators, because if they did, chances are good they will no longer work. 

As I see it, we are still closer to the cheap side of things, than getting anywhere near any extreme expensive side.  The expensive reading can only happen when, all the gold bulls are back again, and the HUI is pointing up.  

Gold Stocks HUI, Review

 

hui-oct-21-2016

 

Wow, what a perfect Head&Shoulder pattern we have, with this HUI gold stock index.  An obvious pattern that can offer support. Support for what? If we talk about support we are actually very bullish. These patterns can also be the setup for a downside breakout.  Even though we may be getting closer to one type of a bottom, we still may not be finished with this gold stock correction.  Gold stocks still need to soar if this gold bull market is bigger than what the majority expect.

The HUI has crashed down and closed a big gap, but on the trip down has also opened a few gaps above present prices. Open gaps above our price range, are very bullish indicators. 

There is a very strong probability that an “A” wave in Primary degree has already arrived and at this time we would be in a Primary degree “B” wave bull market.  We have a long way to go, but this gold stock bull market can inversely track the general stock markets.  Traders will be jumping on and off this gold stock bandwagon, as they are afraid to miss the next big bull market in stocks.

The gold/Hui ratio is pretty normal just under 6:1. With  3:1 being very expensive, we still have some ways to go before the extremes will shift. When we get closer to the extremes, then we can increase the amount of ratio calculations we should make. 

HUI Gold Stock Review

 

hui-oct-12-2016

 

Last time I showed you a potential Intermediate degree 4th wave top, based on an expanded wave start. Any expanded wave bottom will work for any “B” wave rally as well, so if this does correct deep enough or long enough for another Intermediate degree correction to take place, then another “C” wave bull market would get added on.  In this case it I can take a zigzag correction as my first move, would be part of an expanded flat. 3-3-5 would be the final count.  

There is nothing I can use to find a potential (B) wave bottom here except a 60% correction, even then we want to see a very bearish mood at the same time.  Some gold fans are bullish all the time, but that just tells me they got caught up in the recent move as well. 

The Fed is jawboning us with all their potential rate increases, but they can get off their high horses and just do it. All the way from the 60’s to the early 80’s the rates were going up and they still could not kill the gold bull market.  In those days it was true inflation, not this crap we have now. Inflation is theft of working peoples money, and the only way to fight it is to refuse to play their game with every means possible.   

If the working class were to all get 20% pay raises every year for 4 or 5 years, then you’re going to see inflation like never before.

Buying gold and silver bullion will help to mitigate inflation, but that only works if you end up buying it low enough or cost average it. Never use gold stocks as an inflation hedge except to move the inflation into your account, better known as “profit”.   

HUI Late 2015-2016 Review

 

hui-oct-11-2016

 

When we look back to August 2015 and then the January bottom I show it as an expanded bottom, which I have done several times before. I could be wrong, but if there is any doubt at all, that an expanded bottom has happened, unknown to the masses, then this HUI chart has no option but to crash to a new record low again.  We are a good 1/3 of the way there already, but who says it will stop at a double bottom.

SIL sure came close to an extreme gold/Sil ratio. The HUI also came close to an extreme in early August, which managed to hit a ratio of under 5:1, with 3:1 being extremely expensive.  This morning we were at just above 6:1 which is getting cheaper, but still far away from the 10:1 ratio we may need.  

I would be looking for another zigzag on this downward slope, and I’m sure it will try and fool us as being a major bottom. At a bottom of what?  

We are also at a good setup for a diagonal wave 1 so anything can still happen. 

HUI Bearish Decline Review

 

hui-oct-7-2016

 

I have a sneaky suspicion that this leg down may give us a bottom, but any Intermediate degree correction  should take much longer to play out. It may be a one of a kind move where it all just rockets, but rarely do I like to have a zigzag correction inside a bigger zigzag.  We can have an opening zigzag for a flat as that is the standard most of the time.  If the HUI blasts up in a very choppy fashion, then we have to be aware that an expanded pattern can happen.

Worse yet, we can get bored with a triangle again, which would still take many months to play out. The ultimate horror show would be a complete retracement. This would be my least favorite outcome, in the shorter term.

There is also a very high probability that gold stocks have  all so crossed over, and have been in  Cycle degree wave 4, since their respective 2011 peaks.

The HUI 2016 low matched the BGMI mega trend line, which  started in 1942,  so in the future, I do believe that low will get exceeded. First, we have got a better handle on our present location, as location, location is the name of the game with the EWP. 

The Gold/Hui ratio has changed little,  so that offers no extra insight, at this time. 

HUI, Gold Stock Crash Review

 

hui-oct-5-2016

 

This HUI crash does not surprise me as we need a good bearish mood to flush out all those that are betting with too much of their net cash assets. This may go lower in the short term as another small degree wave 3-4  may need to play out.

If I’m even close, then we could see a “C” wave bull market that will impress us, as we could end up at a “D” wave top in Primary Degree. “D” wave tops are bull traps like the EWP book makes very clear with its description. 

 Yes, Cycle degree wave 3 in gold stocks and gold has a high chance of being completed with the 2011 highs, and what we are going through is a triangle 4th wave that is far from being finished.  I’m in the process of putting the Cycle degree wave 3 peak behind us in chart history.  This will still take some time, as it is impossible for me to do it all at once.  I cannot use any higher letters than Primary degree, until a potential 4th wave in Cycle degree has completed. That can still take many years and may not happen until 2021.

The pattern is more important than time, but the pattern will not work, if we are counting from the wrong peak or wrong bottom with the wrong degree. This is always an issue and reviewing on a consistent basis, mitigates this to some extent. Besides, you will never find a better fitting wave count by drawing some mythical wave pattern into the future. We can only find better fitting wave counts by looking into past chart history. 

This morning the Gold/Hui ratio was about 6.3:1 which is not at an extreme just yet, so more upside can happen. When we reach a 3:1 ratio again, then we are getting close to another extreme.  I only use the gold, “cash price”, (GCY00),  when calculating any ratio, and it matters not how wild gold swings up or down. The gold ratio is always working.         

HUI, Gold Stock Bearish Review

 

hui-sept-28-2016

 

Contrarians may not agree, but this bullish phase should have corrected some time ago and then started to carry gold stocks to the moon. Unless they jumped on a SpaceX rocket that has blown up 10 minutes off the launching pad. 🙂  Going to the moon is just an expression that has been used many times in the past, and I’m sure we will read it again at some future bull market top. 

This bullish phase can be in one of two positions, either the bullish phase is not finished and gold stocks head higher, or we think the unthinkable that this bullish phase was a fake start.  Be aware that we could be walking into a mini bear trap, as we could have bottomed at a wave 2 already. If that is the case, then yes, another leg up should develop soon. 

Any potential “D” wave rally is a bull trap clearly detailed in the EWP blue book.  Another great scenario would be that gold stocks decline about 50% or to my previous “B” wave bottom, and then they start to roar with a huge “C” wave bullish phase to a new real “D” wave top.  

HUI 2011-2016 Review

 

hui-sept-7-2016

 

I think gold stocks have trashed any idea that this bull market is just a 4th wave rally, but it will still work as a Minor degree “D” wave bull market. Just about all strong “D” waves act just like and real impulse wave, but in the end they will become bull traps. Short term HUI hit a bottom ending with a nice spike. I like to see those spikes as they are turning signals most of the time.

The entire HUI bear market works as a triangle which is just working up to a potential “D” wave. At about the 300 point price level, we have a lonely gap that has remained open since 2013. I have pointed this gap out many times in the past, but now it may come in handy as gaps can also supply critical turning points. It would not be a problem for the HUI to crash through that gap if it does.   

The gold/hui ratio is sitting at 5.47:1 which is getting up there as being on the expensive side, but not anywhere near the extreme of 2.95:1 at the top of 2011. Starting to drift to the expensive side also suggests that the HUI is not on a big secular bull market. The real bull market will come, but it will only finish an old bull market.  The only way we will truly know if this big bullish phase is a fake, and that would be a complete retracement and a new low. Even a few points lower will do the trick as that can act like a double bottom. Short term we need the HUI to travel to new highs, even if it is only by a small amount.  

HUI, Gold Stock Bull Market Review

 

HUI-July-2-2016

 

The HUI has been on a dramatic rise since the early 2016 bottom, but we have to keep in mind that we can also be in a diagonal bull market. We may still have to go further before a correction sets in and the wave 1 I show, could turn to an “A” wave. Long skinny starts like we have, are more a sign of a diagonal, than some mythical extended wave 1 in a bull market.  The bear market decline works as a long triangle 4th wave, or a diagonal decline.

This I may have to adjust at a later date, but the key thing at present is for this market to keep going, even if we have gaps all the way up. When we get our next large decline, the public could get very bearish, but I focus on the pattern of this impending decline.  Any whiff of this decline being a correction, would send the HUI higher. Not until we see and feel the hype of a massive bullish crowd, will we get close to the end. 

From the “D” wave down to my “E” wave, is only one zigzag, with a leading small set of 5 waves, followed by a larger set of diagonal 5 waves. 

HUI, Gold Stock Index Review: Bull Trap In Gold Stocks?

 

HUI-June-11-2016

 

This HUI gold stock index has soared in the first week of June, which helps to confirm that the previous pattern was a 3 wave correction. The trouble with being very bullish anymore is because this HUI move was very straight up, and therefore can’t be trusted.  I have not heard any obvious gold stock insider selling so at this time my bearish scenario is a lone wolf forecast.  The June rally contains a 3 wave pattern at this time, so this can fit well into a diagonal type 5th wave.  The HUI also tapped the 250 price level on Friday, and then immediately backed off a bit. 

The arrows show where all the gaps are, and I am sure all of them will get closed off in due time.  If this year’s move has all been just a fake, then this sure would surprise all the contrarian gold stock holders. If no real gold stock insider selling news is published, then there is no certain way of knowing if a strong top has just happened. This is where pattern recognition is a very important thing, as the price will just not do it.  I sure am not going to spew out a bunch of garbage, where the HUI has to hold at a certain price level to remain bullish. 

Hopefully it will not take too long to start to show the gold stocks true colors, as I think this run has gone on long enough. Nothing is worse, then selling out too early in a bull market, but a potential fake bull market, would be an entirely different matter.