(click to enlarge)Comments: The RSI of the Gold Bugs Index (HUI) collapsed back into the triangle yesterday after briefly hinting at a breakout. The HUI itself is also continuing within the triangle and appears to be testing the lower boundary of the triangle today. I believe that this test should be successful. Stock trading volumes are seasonally the lowest in this week, and it is unlikely that Gold mining stocks will break down out of their triangle pattern on such a low volume day as this. If the HUI does indeed pass the trendline test today, that may set it up for a retest of the upper boundary, as the two trendlines defining the triangle are squeezing together. Although the action in the Gold stocks has been weaker than I expected the last couple of days, I believe the likelihood of bullish breakout within in less than a week remains intact. In fact, in light of the fairly dovish FOMC minutes put out today, which are another signal that the Fed may not only have paused but actually stopped rate hikes, it is entirely possible that today was the last day to load up on gold mining stocks prior to a bullish breakout. Although I have been full invested in my trading portfolio for a little while now, I took the opportunity to buy a symbolic handful of PAAS call options, just to take advantage of this dip.
Portfolio Exposure to PMs: 100% + Call Options
Sentiment: Moderately Bullish - expecting an upside breakout within less than 1 week.
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