My best guess is that the HUI is still making a triangle. In Elliott Wave terms, it looks like a big, meandering corrective phase for nearly the past two years, and since the May 2005 low we'd be going up in wave "D" of a developing ABCDE.
If so, I see wave D as an overall three-wave (or seven, if you prefer) move, developing as a double zig-zag.
From Friday's close right about 220, I've added a conceptualized ending to the second supposed wave "C." The move from May can be counted bullishly, but IMO it counts much better as a corrective wave, rather than an impulse. To me this looks like a market messing around rather than one taking off for real.
This thing could blow right through the divergences and erase all this bearish conjecture. However:
Commerical traders are still heavily short gold futures. Not an all-time-high for shorts, but in the past year there have only 15 times when their short position was higher. A caveat to this is in Silver, where the Commercials have their 2nd least short position in the past year.
From being net long, at the last reporting the Commercials slammed into a large short position in the Euro versus the US Dollar. On balance, I think this argues against Dollar weakness and Gold strength.
Doug
