slr/igr deal, page-7

The HUI has now fallen 5.6% from last weeks high (and ABU has dropped 6.8%).
The RSI was showing a very strongly overbought value of 80 for over a week and many were calling for a correction.
70 is considered overbought, but this indicator is difficult to use on its own as it can show overbought for extended periods.
When the RSI was starting to hit 70 the HUI was at 455 and yet it rallied another 16.5% to 530.
It has now fallen to 500 and the RSI has fallen back to 60 so is no longer indicating overbought but this is no indication of where this correction might end.
At least it is no longer looking overbought and IMO this will not be a big correction.

An RSI on the HUI above 80 is rare. Looking back as far as 1997 this is the third time. The first time was 2001and despite a multi-month sideways consolidation it indicated the start of the bull market for gold and gold stocks.
The second time that it exceeded 80 was 2002. It corrected for a few weeks, then it doubled over 2-3 months to 250 and confirmed the bull market which took it to 650 last year.
I wonder if the over 80 level on the RSI now, 10 years later might be sending a similar signal that the HUI is nearing a period where it will rally very strongly again.
We have already had a 1 year consolidation this time so the stage may be set for a 2002 style sharp rally.
As they say history never repeats but it does often rhyme.
Such a strongly overbought condition as the last few weeks is a good sign of very strong buying. I like to take notice when the market is telling me something.