Acknowledging the potential of an invalid multi-year head & shoulder pattern, I attempt to identify what potentially could be a reversed head & shoulder (RH&S) formation instead, right in front of us now!
- HUI's monthly chart coupled with its Fibonacci Fan from the peak of 2011 is guiding a highly probable RH&S as can be seen here.
Indeed, without violating its multi-year major support trendline, Fibonacci Fan is depicting an interesting pattern whereby HUI could be charting a RH&S pattern and looking for a decisive new intermediate uptrend most likely in the 2nd half of 2013 (as this is a monthly chart).
Looking at Gold versus HUI and HUI versus SPX ratio charts, we could see that both are approaching multi-year support level, i.e supporting the case that HUI is fast approaching its bottom.
On HUI-to-Gold ratio, it is almost the same level as in 2008's low.
- On HUI-SPX ratio, it is right at the support of the multi-year uptrend line.
- Putting past performance of HUI versus Gold in perspective, HUI outperformed by 80% (Jan 2000 - Dec 2012), 357% (Jan 2000 - Feb 2008) and 63% (Nov 2008 - Aug 2011) respectively. The point here is that HUI has consistently outperformed Gold for the major trend and key intermediate uptrends!
- In conclusion, on the assumption that HUI's major support trendline is not to be broken, we could (i) look forward to miners in starting to outperform gold and equities again soon (ii) expect miners to carve and confirm a new intermediate uptrend most likely towards the 2nd half of 2013.