Gold Stocks – What to Look for Next

The Major Hurdle
The charts employed in this article were prepared after the close on Tuesday July 16, so they do not yet reflect any changes that may occur in intraday trading today (Wednesday). However, the message, or let us say, the technically important points, won’t be altered by this.
In our previous update we noted that what one thing that is required to change the market’s character (i.e., that is required to switch it from bearish to at least short to medium term bullish) is to close at least one of the previously established gaps by rising through them.
Yesterday the gold stock indexes took a first step in attacking the first major gap, by rising slightly into its territory. Assuming that this time, closing the gap will be accomplished, the question arises what the next major hurdle is. Since we like to keep things simple, we are settling on the still declining 50 day moving average. This moving average has proved to be impenetrable resistance on the way down, with the last major failure recorded in early June:

The HUI index has begun to rise into the territory of the first major gap. Note that the last attempt at a trend change from mid-May to early June ultimately was rejected by the 50 day moving average. Rising above this moving average and staying above it in the first retest is the next necessary ingredient to gain confidence in a trend change
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