HUI, NEM Monthly Cycle Double Tops And The XAU Put/Call Ratio Collapsed
HUI and NEM have put in slightly lower cycle highs early today and may of course go higher, with the help of index fund buying due to early modest SPX strength, than their "likely" monthly cycle highs on 12-12. 271.71 today vs 271.74 on 12-12 for HUI and 52.44 today vs 52.49 on 12-12 for NEM. The important thing is that after the monthly cycle sell signal occurred on 12-9 (parabolic on 12-7, you should sell between those two sell signals according to my "Trade the Cycles" system) for HUI, NEM, and the XAU it was too risky to trade long, not whether higher cycle highs occurred, because the monthly cycle rolls over dramatically following a sell signal. Sometimes SPX index funds cause a higher monthly cycle high to occur as they probably did in late September when SPX rallied causing SPX index funds to buy NEM and other index funds to buy the gold/silver stocks in their respective indices.
It appears that index funds have a huge influence on gold/silver stocks because they're a huge market and the gold/silver stock market is a relatively small one. It's analogous to an 800 lb gorilla tugging a monkey around. Small % moves in SPX appear to cause significant moves in NEM and other gold/silver stocks which makes sense given how large index funds are relative to the gold/silver stock market.
It appears that NEM may take a dive today and fill it's downside gap at 50.45 created yesterday. The XAU also has a downside gap from yesterday at 122.49. HUI's chart shows a spike up rather than a gap, as it typically does, I don't know why that's the case.
Monthly cycle lows may occur in the next week or two in the 235-245 (HUI), 45-47 (NEM), and 109-114 (XAU) target ranges, based on their major int term upcycle trendlines since 5-16-05.
Modest SPX strength made SPX index funds buy NEM (and made other index funds buy other gold/silver stocks) and therefore led to general gold/silver stock strength early today, which should be short lived. http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=b&p=&a=m26-12-9%2Cm26-12-9%2Cp12%2Cm26-12-9%2Cp12%2Cfs%2Cm26-12-9%2Cp12%2Cfs%2Cw14&c=%5EGSPC
The NEM Lead Indicator is slightly negative right now after being bullish yesterday at +0.84% vs the XAU. Keep in mind that indicators portend more strength in short term upcycles versus downcycles and of course the monthly cycle has turned down or at least rolled over dramatically, so less strength is likely in a monthly downcycle than a monthly upcycle, which is another consideration.
XAU Implied Volatility fell -1.92% to 29.300 on Thursday 12-22 from 29.875 on 12-21 versus a +2.15% rise in the XAU on 12-22, which is a slight (up to 0.24%) 0.23% rise in fear (-1.92% + +2.15% = +0.23%. The XAU wall of worry grew by 0.23%, therefore fear rose by +0.23%) that portends strength/an uptrend during part of Friday 12-23's session.
The XAU Put/Call Ratio fell an unusually large (> 6%) 11.01% today to 1.10435 from 1.24103 on 12-22 which portends some strength today (an unusually large rise in complacency portends strength), but points to a substantial decline soon because the XAU wall of worry collapsed. Ciao
It appears that index funds have a huge influence on gold/silver stocks because they're a huge market and the gold/silver stock market is a relatively small one. It's analogous to an 800 lb gorilla tugging a monkey around. Small % moves in SPX appear to cause significant moves in NEM and other gold/silver stocks which makes sense given how large index funds are relative to the gold/silver stock market.
It appears that NEM may take a dive today and fill it's downside gap at 50.45 created yesterday. The XAU also has a downside gap from yesterday at 122.49. HUI's chart shows a spike up rather than a gap, as it typically does, I don't know why that's the case.
Monthly cycle lows may occur in the next week or two in the 235-245 (HUI), 45-47 (NEM), and 109-114 (XAU) target ranges, based on their major int term upcycle trendlines since 5-16-05.
Modest SPX strength made SPX index funds buy NEM (and made other index funds buy other gold/silver stocks) and therefore led to general gold/silver stock strength early today, which should be short lived. http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=b&p=&a=m26-12-9%2Cm26-12-9%2Cp12%2Cm26-12-9%2Cp12%2Cfs%2Cm26-12-9%2Cp12%2Cfs%2Cw14&c=%5EGSPC
The NEM Lead Indicator is slightly negative right now after being bullish yesterday at +0.84% vs the XAU. Keep in mind that indicators portend more strength in short term upcycles versus downcycles and of course the monthly cycle has turned down or at least rolled over dramatically, so less strength is likely in a monthly downcycle than a monthly upcycle, which is another consideration.
XAU Implied Volatility fell -1.92% to 29.300 on Thursday 12-22 from 29.875 on 12-21 versus a +2.15% rise in the XAU on 12-22, which is a slight (up to 0.24%) 0.23% rise in fear (-1.92% + +2.15% = +0.23%. The XAU wall of worry grew by 0.23%, therefore fear rose by +0.23%) that portends strength/an uptrend during part of Friday 12-23's session.
The XAU Put/Call Ratio fell an unusually large (> 6%) 11.01% today to 1.10435 from 1.24103 on 12-22 which portends some strength today (an unusually large rise in complacency portends strength), but points to a substantial decline soon because the XAU wall of worry collapsed. Ciao
posted by Joe Ferrazzano at
6:52 AM
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