I believe the PM market is still in the throws of a bear cycle until the 4.5 and 9 year cycles bottom. The current 56 week last bottomed in Oct. as expected. It was right translated in that it came late, the prior 56 week cycle having expanded. This is typical cyclic behaviour when a market is in a bearish trend. If we follow the current 56 week cycle to its nominal termination date, it would be Oct./Nov. this year. This is also when we would see a nest of lows for the 27 month, 4.5 and 9.0 year cycles. So there is a powerful conclusion approaching for the sector if this is correct.
A summary of the HUI cycles status is as follows:
7 week is up
14 week is down
28 week is down
56 week is up
27 months is down
4.5 year is down
9.0 year is down
So in my interpretation of the HUI cycles, the sum of the cycles underlying the 56 week cycle is down (sigma el is down).
Here is a view of the larger cycles and how they look relative to the 56 week cycle.
The challenge for this sector now is the following:
1) If the 4.5 year and 9 year cycles have bottomed, then the HUI will have to rally more than 6-7 months. It is currently in its 6th month off the Oct. low. Previous bear market rallies in 2004 and 2006 lasted 7 months each. What's different this time is that the 4.5 and 9 year cycles are pointing down. So it is unclear how much higher and further the current rally can expand. But I am sure you can see the risk with each passing week if this phasing is correct.
2) Off the Dec. 2003 top (one I remember well), the HUI corrected for 17 months off that high. The high to high was 11 months (ie. Dec. 2003 to Nov. 2004). This was the bear correction leading to a 4.5 year low with the 9 year cycle still pointing up. Now we have the 9 year cycle pointing down.
Off the March 2008 top, the HUI has corrected for 12 months off that high. The high to high thus far is 12 months (ie. March 2008 to March 2009). What's different is that this bear correction is leading to a 4.5 year low and 9 year low, a potentially more bearish scenario time and price wise. Also the length of the correction at 12 months and counting is too short IMO, considering a 9 year cycle low is at hand.
3) The HUI has to climb above HUI 323 on a monthly closing basis to gain Gann support at that level. You can see quite clearly how these levels are key on a monthly closing basis.
4) Gold is sporting a clear double top. Gold now has to take out its high and keep rallying here not only to support the miners here, but also to negate that bearish chart formation.
I have several short term FLD targets that were generated with higher upside targets with the latest rally. If the trend is bearish, some of these will not be met and the HUI tops out soon. If the HUI breaks out topside and goes for these targets, then bullish cyclic action takes over. I will not be a buyer though as I see far too much risk in this area.
Tough spot for bulls and bears.
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain