SPX Weakness Caused SPX And Other Index Funds To Sell NEM (In SPX) And Other Gold/Silver Stocks (Other Indices)
SPX index funds sold NEM early today and other index funds were selling their gold/silver stocks. Minor intermediate term cycle highs appear to have finally occurred yesterday for HUI, NEM, and the XAU.
It's becoming obvious that the reason why NEM is such a good lead indicator for HUI/XAU is because it's the sole gold/silver stock component of SPX (S & P 500), and, since SPX is the 800 lb gorilla of indices, it drives index fund trading, hence SPX is the ultimate lead indicator. Luckily however SPX's cycles don't match gold/silver stocks' cycles. SPX is in a very long term downcycle/primary Bear Market since March 2000 while HUI, NEM, and the XAU are in very long term upcycles/primary Bull Market since October/November 2000. However, SPX obviously has a profound affect on gold/silver stocks' minor int term and short term cycles due to index fund trading.
http://finance.yahoo.com/q/ta?t=5d&s=%5EXAU&l=off&z=l&q=b&a=m26-12-9&a=p12&a=fs&a=w14&c=%5EHUI%2C+NEM&c=%5EGSPC
Rapid very modest % moves in SPX cause rapid significant moves in NEM and other gold/silver stocks in the many indices affected by SPX. Because SPX is probably about to enter the parabolic part of it's monthly downcycle after being very flat, actually rising during much of the gold/silver stock strength in the short term and the minor int term upcycles, SPX should bring an end to the minor int term upcycle since 10-20 for HUI/XAU. It may have ended yesterday.
The NEM Lead Indicator is bullish right now at about +0.50% after being very bearish yesterday at -1.14% vs the XAU. Keep in mind that indicators portend more strength in short term upcycles versus downcycles and of course the monthly cycle has probably 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 -1.45% to 30.260 on Thursday 12-29 from 30.705 on 12-28 versus a +1.67% rise in the XAU on 12-29, which is a slight (up to 0.24%) 0.22% rise in fear (-1.45% + +1.67% = +0.22%. The XAU wall of worry grew by +0.22%, therefore fear rose by +0.22%) that portends strength/an uptrend during part of Friday 12-30's session.
The XAU Put/Call Ratio fell a significant (0.50-1.99%) 1.06% today to 1.03318 from 1.04425 on 12-29 which portends some weakness today.
The latest COT (Commitments Of Traders) data is bearish, with the non contrarian gold Commercial Traders (data as of 12-20-05) engaging in aggressive long liquidation (sold a large 8157 long futures/options contracts) and doing significant short selling (shorted 4202 futures/options contracts). Ciao
It's becoming obvious that the reason why NEM is such a good lead indicator for HUI/XAU is because it's the sole gold/silver stock component of SPX (S & P 500), and, since SPX is the 800 lb gorilla of indices, it drives index fund trading, hence SPX is the ultimate lead indicator. Luckily however SPX's cycles don't match gold/silver stocks' cycles. SPX is in a very long term downcycle/primary Bear Market since March 2000 while HUI, NEM, and the XAU are in very long term upcycles/primary Bull Market since October/November 2000. However, SPX obviously has a profound affect on gold/silver stocks' minor int term and short term cycles due to index fund trading.
http://finance.yahoo.com/q/ta?t=5d&s=%5EXAU&l=off&z=l&q=b&a=m26-12-9&a=p12&a=fs&a=w14&c=%5EHUI%2C+NEM&c=%5EGSPC
Rapid very modest % moves in SPX cause rapid significant moves in NEM and other gold/silver stocks in the many indices affected by SPX. Because SPX is probably about to enter the parabolic part of it's monthly downcycle after being very flat, actually rising during much of the gold/silver stock strength in the short term and the minor int term upcycles, SPX should bring an end to the minor int term upcycle since 10-20 for HUI/XAU. It may have ended yesterday.
The NEM Lead Indicator is bullish right now at about +0.50% after being very bearish yesterday at -1.14% vs the XAU. Keep in mind that indicators portend more strength in short term upcycles versus downcycles and of course the monthly cycle has probably 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 -1.45% to 30.260 on Thursday 12-29 from 30.705 on 12-28 versus a +1.67% rise in the XAU on 12-29, which is a slight (up to 0.24%) 0.22% rise in fear (-1.45% + +1.67% = +0.22%. The XAU wall of worry grew by +0.22%, therefore fear rose by +0.22%) that portends strength/an uptrend during part of Friday 12-30's session.
The XAU Put/Call Ratio fell a significant (0.50-1.99%) 1.06% today to 1.03318 from 1.04425 on 12-29 which portends some weakness today.
The latest COT (Commitments Of Traders) data is bearish, with the non contrarian gold Commercial Traders (data as of 12-20-05) engaging in aggressive long liquidation (sold a large 8157 long futures/options contracts) and doing significant short selling (shorted 4202 futures/options contracts). Ciao
posted by Joe Ferrazzano at
6:41 AM
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