I didn't trust last year's rally in gold stocks which now has been confirmed as the HUI smashes through the 100 price level. It quickly recovered, but this does not mean anything as there still may be more to go. We are also showing a Head&Shoulder pattern, but we know that they can be very deceiving.
Once I see a big longer spike develop then I can see a strong turning again. Just because gold stocks look cheap does not mean that there is no more downside to come.
Just like oil crashing past its 2008 lows, there is no reason why gold stocks cannot surpass their late 2000 lows. That would happen around the 35 HUI price level. All the HUI has to do is crash 65 points and this would be accomplished.
One thing we can be assured of and that is that indices rarely, if ever, execute an inverse stock split.