A Big Important Number for the “Hoo-Ey”

As we noted yesterday, gold stock bulls received a big piece of positive price action when bellcow Newmont Mining reached a new high of $72.13.

Today, we look at another bullish “line in the sand” level for gold stocks. The number is 635.

While Newmont is a key player in the gold complex, traders like to monitor the Gold BUGS Index for a broad gauge of gold stock action. This index’s nickname is the “HUI.” (We pronounce it “hoo-ey.”)

#-ad_banner-#After enjoying the rebound we predicted back in December 2008, the HUI spent a good amount of time stuck in a sideways range. But as you can see from the chart below, the index popped to a new high in September. This new high – at 635 – was followed by a sharp correction. But in the past month, the HUI has rallied higher, and sits just below 600 right now. Should the index finally clear 635, it’s another sign cheap gold stocks are entering the next leg of their bull market.