It appears we have reached the first major correction in the bull market which started January 19 2016. The slow down we had from late April into June was more of a sideways consolidation. This one is likely to be a more significant shakeout entailing a bit more pain. But, its normal- deal with it.
Personally, I had hopes that we could rally up to the psychologically significant levels of HUI 350-370 where we had PORs in the previous bull and bear markets. But instead I think the market is now succumbing to its own gravitational force.
In fact, this rally petered out right at the limit of other strong rallies. Like many forum members we subscribe to many different news services. One of my favorites is Bob Hoye and his partner Ross Clark. As it turns out his past bull analog comparison turned out pretty accurate and you can see how this rally flamed out in a normal zone.
That’s life, trees don’t grow to the sky.
Bull Rally analogs BGMI
Typically the first major correction in this index lasts from 5-8 weeks and declines 25%. That would put the HUI down at the level of HUI 214 and we are 3 weeks into the decline. So that’s the typical target for price and time. Trade it as you see fit, knowing that you don’t have to trade it at all.
What gold has been doing is very healthy. Recall my well worn Matterhorn chart as it clearly demonstrates that as long as it holds the 1309 level, it is simply a healthy B/T consolidation of the break out move. This process is referred to as “building cause”
I am trading a bit around the edges, I dumped most of my MUX as its liquid and very volatile. I am just improving my cost basis, nothing wrong with these companies. I am mainly sitting tight and remaining cool as Mr. Cucumber.
PS… For those with really shaky knees the genesis of this bull market has not changed. It is driven by negative interest rates and government sanctioned financial fraud. Nothing will change for 5-10 years to reverse this trend