"How are you?

"Eoin, some time ago a subscriber posed a question in relation to the 200 MA, which I am unable to find after a little searching on the site. Namely, can you apply the "buy on pullback" idea to a fund that comprises a number of equities, among other asset classes.

"I would guess you can as the majority of the constituent parts are from the same sector and commonality would dictate that more than one equity would pullback, and thus the fund as a whole would do likewise, and therefore present one with a buying opportunity.

"I ask this as I am looking to invest in some of the mining related open ended funds that David has mentioned in the past and these funds are currently skirting their 200 MAs. As you and David have alluded to in the audios gold could be close to entering the 'mania' phase of its bull run and the mining companies would therefore start playing catchup. I'd like to have some exposure to that and think now is a good time to jump on.

"I hope your seminars are going well for you. The general response does seem very positive and it's not at all surprising when I look back at my sole visit a little while back. One thing that did stand out, and was very encouraging for me, a beginning private investor, was the number of people with a similar profile to me. I half expected the 'class' to comprise mostly of large hedge fund managers and high net worth individuals, and while those people were present, there were also a number who were just stating out in the world of investing and that was very nice to see. I still very much consider myself a beginner and I've made all the mistakes beginners make (certainly in relation to spread-betting!) but it's comforting to know I'm not the only greenhorn around here. I am enjoying it.

Eoin Treacy's view Thank you for your kind words and I am delighted you enjoyed the Chart Seminar which continues to attract delegates with varying degrees of experience; from the novice to the most seasoned. I agree that funds focused on a particular sector are suitable vehicles to apply behavioural technical analysis to. In fact the only time our analysis might not work on a fund is when it is compiled of a mix of different asset classes such as property, bonds and equities.

The Blackrock World Mining Investment Trust trades at a discount to NAV of 15% and is heavily weighted by the iron-ore oligopoly Rio Tinto, BHP Billiton and VALE. It is also leveraged to copper, gold, silver and zinc. The trust remains in a consistent medium-term uptrend and posted an emphatic upside weekly key reversal last week from the region of the 200-day MA. The present consolidation is relatively similar sized to that posted in the first half of 2010. A sustained move below 700p would be required to question the consistency of the advance.

The Smith & Williamson Global Gold & Resources open ended fund offers more exposure to gold miners. Its focus on mid-tier precious metal miners has allowed it to outperform impressively since the 2008 lows. It also hit a medium-term peak in December and has completed a reversion towards the 200-day MA where it appears to be in the process of finding support. A sustained move below 400p would be required to begin to question that view.

The US listed Market Vectors Gold Miners ETF has also been consolidating for the last few months and also appears to be in the process of finding support in the region of the 200-day MA. These three funds, each with a slightly different focus, have a high degree of commonality and the upside can continue to be given the benefit of the doubt provided the mid-May lows hold.

With regard to your comment on gold miners playing catch-up, the NYSE Arca Goldbugs Index of unhedged gold producers which has a similar pattern to the above ETF has underperformed the gold price. At least part of the reason for this is that large gold miners tend to have little free cash flow due to the increasingly high cost of developing mining operations. As a result large gold miners tend to rally late in the cycle since it takes time for high metal prices to make a difference to their balance sheets. Smaller companies tend to offer more leverage to the gold price and outperform when metal prices advance.