THE PRECIOUS METALS
"YOU AIN'T SEEN NOTHING, YET"
PART I - THE HUI
"HUI 365 - SOONER THAN YOU MIGHT THINK"
It seems that fundamental analysis and technical analysis will always be intertwined like the weaving of a basket. To me, fundamental analysis includes all of the hard facts that provide the fundamental make-up of a market or of a company. Revolving around those fundamentals are the psychological hopes, dreams, and fears of investors and management. To me, charting and technical analysis incorporate the psychological factors that revolve around the trending fundamentals of a company. A company can have a great fundamental story, but if investors do not know the story or do not believe in it, the stock price will remain stagnant. Let's take a look at the potential of the HUI index through charts and technical analysis- with a little fractal flare.

It is hard to communicate well without using some kind of labels to indicate the different parts of a chart. We will use Elliot Wave labels to do so, but such labels will be rather rudimentary, I am afraid. For this, I apologize in advance.

The HUI index rose about 735% from its low of 35, up to 258. Since that 258 high the HUI has been mired in a correction for about a year and a half. If one listens to many PM investors, one might believe that the sky is falling. I suspect that such psychology is classic to a Wave II retrace in Elliot Wave terms. I suspect that we are currently near the bottom of Wave II. From here, we go much higher, IMO.

To familiarize yourself with the Elliot Wave count that I am using, please click on the below link to the chart. Some things that I want to show cannot be easily shown on the smaller size charts that must fit this editorial page. The links will give larger charts that are easier to see and understand……..I hope.

http://stockcharts.com/def/servlet/SC.web?c=$hui,uu[g,a]waolyyay[d19900721,20051231][pc50!c200][vc60][ium12!uc20!la5,34,5!lh5,5!ll14!lg][j49291194,y]&listNum=1


HUI FRACTALS

A "fractal" is merely a part of a chart that looks similar to another part of the chart. I suspect that fractals represent a similar mindset by investors in two separate periods of time. I also suspect that when similar fractals appear at similar junctions in a chart, the importance of such fractals might be increased.

The following chart shows two similar fractals. The first one encompasses the smaller wave 2 while the second one encompasses the larger Wave II. The wave 2/ Wave II fractals are circled in yellow. The early wave 3/ Wave III fractals are circled in pink.

For larger version of fractal chart, click link, below…..

http://stockcharts.com/def/servlet/SC.web?c=$HUI,uu[w,a]daolyyay[d20000121,20051231][pb50!b200][vc60][ium12!la5,34,5!lh5,5!ll14!lg][J55399491,Y]&listNum=1

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=1237552,1&cmd=show[s54220737]&disp=E

Link for Ribbon fractal chart, below…….

http://stockcharts.com/def/servlet/SC.web?c=$HUI,uu[f,a]daclnnay[d20000501,20051227][pb40!b50!b60!b70!b80!b90!b100!b110!b120!b130!b140!b150!b160!b170!b180!b190!b200][i][J56795151,Y]&listNum=1

Another similarity might exist in the use of Andrews Pitchforks. Notice that the middle tine of the fork runs from the bottom of wave 1, over the "b" of wave 2, to the top of wave 3. Since symmetry is important in charts as described by Gann, it might be logical that a similar Andrew Fork might run from the bottom of Wave I to the top of Wave III. Such similarities might not be exact, but just imagine if they would rhyme.

Click on link for larger chart, below………

http://stockcharts.com/def/servlet/SC.web?c=$hui,uu[g,a]waclyyay[d20000211,20051231][pc20!c5][vc60][iub14!um12!la12,26,9!lh14,3][j54220737,y]&listNum=1

Although pure speculation, if those fractal similarities hold any weight at all, then we might be able to construct a chart to seek the potential of a Wave III advance in the HUI index. The next chart is constructed with angled support and resistance lines, focusing on where our newest fractal might take us over the intermediate-term. Note the similar relationship of the smaller wave 2/3 fractal to support and resistance lines; compared to the Wave II/ Wave III fractal. I have listed a potential EW count for the developing trend with an alternative count in parenthesis. Please note: Master David Petch has suggested the possibility of a "running correction" since the potential Wave II has only corrected 50% of the Wave I rise, in time. Such a proposed running correction might take the HUI to new highs, though the HUI would remain in "corrective mode. As an investor, I care less about how we go higher, than about knowing we are going higher. The potential exists for HUI 240ish, 280ish, then 365.

Click links to larger diamond charts, below….

http://stockcharts.com/def/servlet/SC.web?c=$hui,uu[p,a]daolyyay[d20001002,20051231][pb50!b200][vc60][ium12!uh5,5!ug!la5,34,5!ll14][j57198680,y]&listNum=1

http://stockcharts.com/def/servlet/SC.web?c=$HUI,uu[w,a]waclyiay[d20030806,20051231][pb50!b200!i!c20!h.02,.20][vc60][iut!ua12,26,9!lb14!ld20!lg!lf!lk14!lh14,3!ll14][J57133508,Y]&listNum=1

http://stockcharts.com/def/servlet/SC.web?c=$HUI,uu[g,a]daolyyay[d20000721,20051231][pb50!b200][vc60][ium12!la5,34,5!lh5,5!ll14!lg][J54950999,Y]&listNum=1

Can we put it all together to seek a potential target for Wave III of the HUI? The line that runs toward the potential Wave III is not a trend line, but what I call a "directional line", one that hopefully points to the general area that Wave III might terminate. On this chart the potential of the HUI Wave III seems to be around 1220. Another way to estimate the Wave III target might be by using percentages. Since Wave I increased by about 735%, we might expect Wave III to ascend about the same percentage. So, 7.35 times the potential Wave II bottom of 165 equals 1212.

Click on link, below, for larger charts…….

http://stockcharts.com/def/servlet/SC.web?c=$hui,uu[p,a]meclyyay[d20000613,20051231][pf][vc60][iub14!um12!ua12,26,9!lp14,3,3][j56051030,y]&listNum=1

http://stockcharts.com/def/servlet/SC.web?c=$HUI,uu[g,a]waolyyay[d19940221,20051231][pb50!b200][vc60][ium12!la5,34,5!uh5,5!ll14!ug][J57262790,Y]&listNum=1

I would like to thank the many posters of the Gold-Eagle Forum for their daily input. There are simply too many to list, but a special note of thanks goes out to TQ, a truly intelligent and gentle-man; and to Grininbarrett, whose insight into charts and lines is unbelievable. Thank you also, to Dr. Vronsky and Westerman for creating a place called the GOLD-EAGLE Forum where PM investors can interact and learn in a creative environment. The link to the GOLD-EAGLE Forum is www.gold-eagle.com/cgi-bin/gn/get/forum.html.

Also, a special thank you goes out to Master David Petch and Captainhook at www.treasurechests.info/index.php. Master Petch is one of the finest Elliot Wave analysts I have seen. The Captains work is extremely thorough. My subscription is worth every cent. Some of David Petch's editorials are archived at www.gold-eagle.com/research/petchndx.html. In fact, GOLD-EAGLE.com is a comprehensive Precious Metals Site with all of the trimmings.


GOLDRUNNER

August 20, 2005

E-mail contact:
Act0319@aol.com


Please understand that the above is just the opinion of a small fish in a large sea. None of the above is intended as investment advice, but merely an opinion of the potential of what might be. Simply put:

The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions.