One year has passed since gold stocks initiated their impressive bull run. A look at the gold to HUI index ratio well reflects this bullish trend. The question now arises as to how much power is left in the current move.
At the time of writing, the Gold to HUI ratio stood at 5.701.The 14 week relative strength index is at 36% and is now showing bullish divergence. The 61.8% Fibonacci retracement level based on the 1.60 to 10.33 range traded between November 2003 and September 2015 comes in at 4.935 and should act as a solid support level. The MACD-V level of minus 182 reflects the extremely oversold state of this ratio.
Based on the above technical observations, we can only assume that the accumulation of gold stocks should be delayed until this market has been able to unwind its current overbought condition.
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