When looking back on assets to avoid over the past 5 years, mining stocks sure come to mind as they performed horribly, losing nearly 80% of their value.
Yet looking back over the past couple of months, they have been one of the best assets to own.
Earlier this year, the Gold BUGS Index created a series of lows around the 100 level. The index created a reversal pattern (bullish wick) at (1) above. Following this reversal pattern, mining stocks took off.
Now HUI is testing a triple resistance zone at (2) and could be creating a weekly bearish reversal pattern (bearish wick).
It's a dangerous place for mining stocks to be if a reversal pattern happens at (2).