I was very surprised by the strength exhibited in the mining shares today given the extreme weakness that was initially seen in both gold and especially in silver.

At one point today, silver had fallen all the way back into the box – the former range trade zone that held it for nearly a year – before it bounced off of that 50 day moving average right near the top of the box.

It was the mining share strength that brought the metal back up from its worst levels of the session. I was watching both the HUI and the Comex futures simultaneously on a tick by tick basis. As the shares refused to garner more selling from their GAP DOWN opening, the metals began to firm. Before long, both gold and silver refused to completely fall apart as it looked like they were going to do.

Needless to say, today’s action in the mining shares is a huge moral victory for the precious metal bulls. While the damage on the chart remains, until this index actually CLOSES BELOW that very critical 210 level, you have to give the edge to the bulls for their sheer tenacity.

Instead of the market breaking down, the bulls might have done enough today to allow for a correction to occur in TIME and not PRICE. It all depends on whether they can hold the line at 210. Now, a close below that level, especially to end the week, would surrender their faint edge to the bears. Thus, tomorrow is shaping up to be a big, big day for both sides.

You can notice that the 20 day moving average was the high of the session. Prior to this week, the HUI has not CLOSED BELOW the 20 day since the very first week of April. Yesterday, the fact that it fell below both the 10 day and the 20 day was a strong chart negative. The bounce today was checked by the 20 day so the first order of business for the bulls tomorrow will be to see to it that the HUI CLOSES ABOVE that level to end the week. If not, I would look for the bears to regain a slight edge heading into next week.

The chart is showing a definite loss of upside momentum with the POSSIBILITY of this week’s high at 233 becoming a LOWER, SECONDARY TOP. Thus the reason that the burden rests firmly on the bulls in tomorrow’s session to stage a strong showing.