11-10 Thoughts and Indications
HUI, NEM, and the XAU gapped up at the open then quickly fell and filled those gaps. HUI and the XAU have broken their downtrend lines since the 9-30-05 monthly cycle highs (see 3 month XAU chart http://finance.yahoo.com/q/ta?s=%5EXAU&t=3m&l=off&z=l&q=b&p=&a=m26-12-9,p12,fs,w14&c= ) and are in wave 3 of the monthly upcycle that began on 10-20-05, so there should be another higher cycle high than the one that occurs in this short term upcycle. Given the breakout there should be another day or two of sharp gains. The short term upcycle that began late on Tuesday 11-8 would have probably had another day or two of upside anyway. Short term cycles last about one week on average from cycle low to cycle low, so upcycles last about 2 to 3 days. The market is open for Veterans Day on 11-11, I thought it might be closed.
NEM outperformed the XAU yesterday by +0.26% so the NEM Lead Indicator remains bullish and has been since Tuesday 11-1. NEM is modestly underperforming as I write this. The spike move that began late on 11-8 is correcting as typically occurs, but this weakness should be a buying opportunity.
XAU Implied Volatility held up very well yesterday, falling slightly to 33.075 versus 33.08 on 11-8 despite a very sharp +3.09% rise in the XAU, which is a very sharp rise in fear that portends strength/an uptrend by session's end.
The XAU Put/Call Ratio fell very sharply to 0.77262 today from 0.80729 yesterday which correctly portended early weakness/a downtrend today because it was a very sharp rise in complacency. It's the trend that's important, not whether the XAU is in plus or minus territory. In other words the XAU can have an early sharp spike move but it's likely to have a significant pullback if the XAU Put/Call Ratio declined very sharply as happened today. The XAU Put/Call Ratio is a great indicator as is the NEM Lead Indicator. XAU Implied Volatility is a good indicator but is probably not quite as important as the other two are.
So, things are going as expected, meaning that last weekend's update assessment ( http://www.joefrocks.com/TradetheCycles.html scroll down past the major averages work) remains unchanged. You should read it and maybe read it twice. The charts are very important because cycle channels/trendlines are the primary market timing consideration. Ciao
NEM outperformed the XAU yesterday by +0.26% so the NEM Lead Indicator remains bullish and has been since Tuesday 11-1. NEM is modestly underperforming as I write this. The spike move that began late on 11-8 is correcting as typically occurs, but this weakness should be a buying opportunity.
XAU Implied Volatility held up very well yesterday, falling slightly to 33.075 versus 33.08 on 11-8 despite a very sharp +3.09% rise in the XAU, which is a very sharp rise in fear that portends strength/an uptrend by session's end.
The XAU Put/Call Ratio fell very sharply to 0.77262 today from 0.80729 yesterday which correctly portended early weakness/a downtrend today because it was a very sharp rise in complacency. It's the trend that's important, not whether the XAU is in plus or minus territory. In other words the XAU can have an early sharp spike move but it's likely to have a significant pullback if the XAU Put/Call Ratio declined very sharply as happened today. The XAU Put/Call Ratio is a great indicator as is the NEM Lead Indicator. XAU Implied Volatility is a good indicator but is probably not quite as important as the other two are.
So, things are going as expected, meaning that last weekend's update assessment ( http://www.joefrocks.com/TradetheCycles.html scroll down past the major averages work) remains unchanged. You should read it and maybe read it twice. The charts are very important because cycle channels/trendlines are the primary market timing consideration. Ciao
posted by Joe Ferrazzano at
7:34 AM
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