This Rebound Is The Monthly Downcycle Beginning Relatively Flat
So, today's rebound fits the nature of cycles. HUI and NEM hit monthly/minor intermediate term cycle highs yesterday and the XAU did so on 12-12. Gold is doing an Elliot Wave B up in a monthly downcycle.
SPX (S & P 500) drives index fund trading and therefore HUI, NEM (in SPX), and the XAU. A lot of yesterday's weakness was due to index funds selling gold/silver stocks and early today they were buying, but it should be a similar day with early very brief strength followed by a downtrend. SPX is in a monthly downcycle since December 14 but hasn't hit a 2% follow through sell signal yet. When SPX goes down or up that leads to weakness or strength in other indices and their corresponding index funds sell or buy their gold/silver stocks and of course SPX index funds sell or buy NEM. See 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
The NEM Lead Indicator is bullish right now at about +0.50% after being slightly bearish yesterday at -0.14% 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 rose +6.26% to 30.480 on Tuesday 12-27 from 28.685 on 12-23 versus a -0.53% decline in the XAU on 12-27, which is a very sharp (3-6%) 5.73% rise in fear (+6.26% + -0.53% = +5.73%. The XAU wall of worry grew by +5.73%, therefore fear rose by +5.73%) that portends strength/an uptrend during part of Wednesday 12-28's session .
The XAU Put/Call Ratio fell a significant (0.50-1.99%) 1.45% today to 1.07476 from 1.09059 on 12-27 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
SPX (S & P 500) drives index fund trading and therefore HUI, NEM (in SPX), and the XAU. A lot of yesterday's weakness was due to index funds selling gold/silver stocks and early today they were buying, but it should be a similar day with early very brief strength followed by a downtrend. SPX is in a monthly downcycle since December 14 but hasn't hit a 2% follow through sell signal yet. When SPX goes down or up that leads to weakness or strength in other indices and their corresponding index funds sell or buy their gold/silver stocks and of course SPX index funds sell or buy NEM. See 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
The NEM Lead Indicator is bullish right now at about +0.50% after being slightly bearish yesterday at -0.14% 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 rose +6.26% to 30.480 on Tuesday 12-27 from 28.685 on 12-23 versus a -0.53% decline in the XAU on 12-27, which is a very sharp (3-6%) 5.73% rise in fear (+6.26% + -0.53% = +5.73%. The XAU wall of worry grew by +5.73%, therefore fear rose by +5.73%) that portends strength/an uptrend during part of Wednesday 12-28's session .
The XAU Put/Call Ratio fell a significant (0.50-1.99%) 1.45% today to 1.07476 from 1.09059 on 12-27 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
7:34 AM
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