HUI – Buy Signals

HUI – the AMEX Gold Bugs Index is a basket of relatively unhedged gold miners. Gold Indices like the HUI tend to lead the price of gold. Technically I observe three buy signals on the short term daily chart:

1) Diagonal downtrend line (previous resistance) is broken to the upside.
2) RSI downtrend line is broken.
3) PPO Histogram showing positive divergence.

So, unless the A-B-C correction develops into A to E correction (unlikely) it is reasonable to assume that the HUI is headed higher. The May top (401.69) will get tested and Higher high is certainly a possibility.

The technical situation of other gold indices (XAU, GOX & GDM) is similar. Investors and traders can get exposure to gold mining equity with the GDX ETF.

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