COMEX Division Margins on Gold Futures Contracts Tightened As Of Thursday

Thanks to Jeff for providing the link. Full info at http://www.nymex.com/notice_to_member.aspx?id=ntm540&archive=2005

COMEX Division Margins on Gold Futures Contracts
Member: Clearing and Non-Clearing (Hedge Margin)
New: $1,500
Old: $1,000
Non-Member Customer (Speculative Margin):
New: $2,025
Old: $1,350

I suspect that this will exacerbate gold stock weakness tomorrow because buyers will be afraid to pull the trigger in many cases and sellers will be greater in number and tend to sell more shares. The weakness is largely psychological rather than fundamental since gold lags gold stocks, which is why HUI/XAU hit monthly cycle lows on 10-20-05 and gold did so on 11-4-05. To those in the know this means OPPORTUNITY. Buckle up!

NEM Underperformed the XAU by -0.11% Today

Which is a sign that there's probably more downside tomorrow. As I discuss in the weekly updates, a sign to look to buy when it appears the time is near is to look for the NEM Lead Indicator to be bullish, hopefully at +0.50% or greater versus the XAU. Note that HUI's downside gap at 245.01 and the XAU's at 115.10, both from 11-21's open, were filled today as expected.

Another positive sign and a tool that may become part of my system is that VIX, the S & P 500 Volatility Index (SPX options implied volatility gauge), rose +1.43% today versus a -0.64% decline in the S & P 500 (SPX), which is a significant +0.79% rise in fear that portends SPX strength for part of tomorrow's session. This is important because NEM is in the S & P 500, so SPX index funds buy NEM on SPX strength and sell NEM on SPX weakness like today. So, the significant rise in fear today is a plus for NEM's prospects tomorrow. The most important thing to look for tomorrow though is for the NEM Lead Indicator to be bullish, hopefully at +0.50% or greater. Ciao

The Downside Gaps From 11-21 For HUI and the XAU Will Probably Get Filled Today

It looks like HUI will fill it's downside gap at 245.01 from 11-21 today (or tomorrow) and the XAU will fill it's downside gap from 11-21 at 115.10. Then the monthly upcycle Elliot Wave 5 short term upcycle should begin shortly thereafter. The XAU Put/Call Ratio fell slightly over 5% to 0.64003 today from 0.67391 yesterday which is a very sharp rise in complacency that portends weakness today. XAU Implied Volatility rose slightly to 30.005 yesterday vs 29.945 on 11-28 vs a -0.69% decline in the XAU yesterday which is a significant rise in complacency that portends weakness today. Those indicators clearly indicate that the downside gaps from 11-21 will get filled.

The NEM Lead Indicator is bullish yet again today at about +0.25% as I write this and was +0.14% yesterday and a very bullish +1.63% on 11-28. The NEM Lead Indicator clearly says that a monthly upcycle remains in effect and that it's probably safe to trade the Elliot Wave 5 short term upcycle that may begin today or tomorrow.

NEM's half session downcycle from 48 on 11-28 to 47.16 on 11-29 was probably Elliot Wave A down of the Elliot Wave 4 short term downcycle, then it appears that Wave B up lasted about 3 hours yesterday for NEM and Wave C down began near session's end yesterday, which explains the plunge today that probably will fill 11-21's gaps, and then the monthly upcycle Elliot Wave 5 short term upcycle should occur shortly thereafter.

NEM Outperformed the XAU by +0.14% Today BUT

Notice in the NEM Lead Indicator 1 day chart ( http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem ) that the gap between NEM and the XAU narrowed dramatically towards session end which indicates that some early weakness or weak strength tomorrow is likely.

From yesterday's late session Elliot Wave 3 short term cycle high at 48 NEM fell about a half session until today's cycle low at 47.16, which is probably a very short term cycle low rather than a short term cycle low, because short term downcycles usually last about 1 to 3 sessions, and, given how strong the prior short term upcycle was it's unlikely that a half session downcycle would correct it. Of course HUI and the XAU did have corresponding downcycles that lasted over a session, so given how bullish the NEM Lead Indicator is, one can't rule out that the Elliot Wave 5 short term upcycle has begun. That appears to be less than a 50% probability though. We'll see what tomorrow brings. Ciao

The Indicators Portend Strength and Welcome to the Elliot Wave 4 Short Term Downcycle

HUI has fallen about -2.50% from it's cycle high yesterday ( http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=b&p=&a=m26-12-9,p12,fs,w14&c= ) so far and all three indicators portend strength today, but the Elliot Wave 4 short term downcycle is the most important consideration today. The NEM Lead Indicator was very bullish at +1.63% vs the XAU yesterday and is bullish again today at about +0.50%. This alone probably means that an Elliot Wave 4 short term cycle low will probably occur today for HUI, NEM, and the XAU, but I need to do more analysis. Keep in mind that the downside gaps from 11-23 and the downside gaps from 11-21 at 245.01 for HUI and at 115.10 for the XAU (NEM's at 46.33 was filled) may get filled in this Elliot Wave 4 short term downcycle. So, short term cycle lows may not occur today.

You can also draw the short term downcycle's parabolic trendline and wait for a 1% follow through short term cycle buy signal (2% required for monthly cycles), but waiting for a trendline buy signal is much less effective for short term cycles than monthly cycles because you can miss much of or even an entire cycle if you wait for a buy signal because of the usually short timeframe involved. Even in the prior monster EW 3 short term upcycle much of the move occurred in one day when the XAU rose nearly 6%, if you weren't in you missed a big part of the move.

XAU Implied Volatility rose sharply to 29.945 yesterday from 29.13 on 11-25 vs a -0.32% decline in the XAU yesterday which is a significant rise in fear that portends strength/an uptrend for some of today's session, but the Elliot Wave 4 short term downcycle is the most important consideration today. It appears that monthly upcycle Elliot Wave 3 short term cycle highs finally occurred yesterday. It was such a strong/unusually long short term upcycle that it made a few higher highs in rollover mode. Short term upcycles usually only last 2 to 4 days, but the most recent one lasted well over a week (7-8 sessions). The XAU Put/Call Ratio rose to 0.67391 today from 0.66179 yesterday which is a significant rise in fear that portends strength/an uptrend for some of today's session. Ciao

The NEM Lead Indicator Is Very Bullish and the COT Data is Bullish Short Term

NEM outperformed the XAU by a very wide margin of +1.63% today, which means continued upside surprise short term, or at least modest downside, is likely.

The COT data http://www.cftc.gov/dea/options/deacmxsof.htm is short term bullish because of the unusually large (> 10% decrease in long position) degree of long liquidation for both gold and silver by the non contrarian Commercial Traders. The gold Commercial Traders sold an unusually large -16,486 long futures/options contracts which correctly portended short term strength but added a very modest short 206 futures/options contracts which portends some very modest weakness this week. With silver the picture is more bullish because in addition to the unusually large long liquidation the Commercial Traders covered 822 futures/options contracts which also portends strength. Keep in mind that this COT data is as of last Tuesday 11-22, so much of these indications are factored in already.

....................Upside Gap Filling Action

The XAU filled it's upside gap at 119.06 that was created at 11-23's gap down open. Both XAU Implied Volatility and the XAU Put/Call Ratio portend strength/an uptrend for some of today's session while the NEM Lead Indicator was bearish on Friday at -0.53%, but is bullish today. XAU Implied Volatility fell -1.27% to 29.130 on Friday 11-25 from 29.505 on 11-23 versus a +2.06% rise in the XAU on 11-25, which is a significant (0.50-1.99%) 5.82% rise in fear (-1.27% + +2.06% = +0.79%. The XAU wall of worry grew by +0.79%, therefore fear rose by +0.79%) that portends strength/an uptrend during part of Monday 11-28's session. The XAU Put/Call Ratio rose to 0.66179 today from 0.65499 which portends strength/an uptrend during part of today's session.

NEM is acting well so far today and has surprisingly exceeded it's cycle high at 47.74 from 11-22 with a cycle high so far today at 47.84. Looks like the monthly upcycle Elliot Wave 3 is peaking today for HUI, NEM, and the XAU. Stay tuned.

.......................Weekly Update Ready

At http://www.joefrocks.com/TradetheCycles.html scroll down a few pages past the major averages stuff. See http://www.joefrocks.com/GoldStockCharts.html for all the charts. My home page is http://www.JoeFRocks.com/ Check out the 5 day HUI chart that shows it's second/Elliot Wave 3 short term upcycle rolling over. Ciao

........................Disclaimer
Joe Ferrazzano is not a registered investment advisor. Investing in stocks involves risk. Joe Ferrazzano is not a registered broker or dealer. Each investor has to ascertain what percentage if any of one's investments should be allocated to growth stocks or gold/silver stocks. Please see a financial planner, registered investment advisor or at least do your homework and decide what is right for your situation. Growth stocks and gold/silver stocks tend to be extremely volatile which creates opportunities but also can be very painful and risky. Each investor must take complete responsibility for his or her investing actions. Joe Ferrazzano should be considered as one source of information out of many from which to derive a decision on investing.

NEM Put In A Monthly Upcycle Second/Elliot Wave 3 Short Term Cycle High Early On 11-22

The XAU probably did so late on 11-22 and HUI probably did today. NEM's short term cycle is probably leading as usual. NEM underperformed the XAU by a wide margin of -0.53% today and underperformed for the week by -1.52%. So, today was probably NEM and the XAU's Elliot Wave 4 short term downcycle beginning relatively flat and probably was HUI's Elliot Wave 3 short term upcycle rolling over/flattening out and probably peaking today.

The likely scenario still is that HUI, NEM, and the XAU fill the downside gaps they created today and the downside gaps at 115.10 and 245.01 from 11-21's open for the XAU and HUI. HUI put in a slightly higher high today than it's previous high on 11-22 at 255.03, so HUI's short term downcycle will probably just be starting today.

Headfake, Short Term Downcycle Probably Starting Out Flat

I was surprised to see this much strength today, but it appears that it's the short term downcycle/Elliot Wave 4 of the monthly upcycle beginning relatively flat. Why is it unlikely that the Wave 5 short term upcycle has begun? The fact that NEM is underperforming the XAU by a wide margin right now (over -0.50%) is one sign that this is a headfake move. Also, HUI, NEM, and the XAU are filling or trying to fill upside gaps from Wednesday. The likely scenario is that HUI, NEM, and the XAU fill the downside gaps they created today and the downside gaps at 115.10 and 245.01 from 11-21's open for the XAU and HUI. HUI put in a slightly higher high today than it's previous high on 11-22 at 255.03, so HUI's short term downcycle will just be starting today assuming it is a short term downcycle.

The NEM Lead Indicator was +0.51% vs the XAU on Wednesday, and XAU Implied Volatility also portends strength today, rising +4.85% to 29.505 on 11-23 from 28.14 on 11-22 vs a -2.35% decline in the XAU on 11-23, which is a sharp rise in fear that portends some strength today. The XAU Put/Call Ratio ratio revealed an unusually large (> 6%) rise in fear today, rising to 0.65499 today from 0.58075 on 11-23, that portends weakness/a downtrend for some of today's session, which supports my belief that Elliot Wave 4 short term cycle lows haven't occurred yet. The fact that NEM is underperforming the XAU by a wide margin (over -0.50%) right now is a clear sign that this is probably just a headfake due to upside gap filling action and actually HUI made a slightly higher cycle high today than it's high on 11-22, so HUI's short term downcycle will just be starting today if it is a short term downcycle. Ciao

HUI, NEM, and the XAU Close Near Session Lows

It looks like HUI and the XAU will fill their downside gaps from 11-21 at 245.01 and 115.10 on Friday 11-25 or whenever the next trading day is. Friday may be a half session, I need to check that. So, short term cycle lows may occur on Friday and short term cycle traders like myself may re enter. NEM outperformed the XAU today by a wide margin of +0.51% which supports the expected scenario that HUI and the XAU hit short term cycle lows shortly after filling their downside gaps from 11-21. There's a good chance that the next buying opportnity will occur on Friday 11-25 assuming the market's open. I'll find out if it's a half day as I think it usually is. The next short term upcycle will probably be the last tradable short term upcycle of this monthly upcycle since 10-20-05 for HUI/XAU and since early November for NEM.

Give thanks for what you have. If you're in good health mentally, physically, and spiritually, that's by far the most important thing, you can always work on the financial aspect if need be. God bless you.

The Downside Gaps From Monday 11-21 Should Get Filled

HUI has a downside gap at 245.01, NEM has a downside gap at 46.33 that was filled early today, and the XAU has a downside gap at 115.10, all created at 11-21's open, that should get filled in this Elliot Wave 4 short term downcycle. Notice that NEM led to the downside.

Once HUI and the XAU fill those downside gaps it should be back to the races in the Elliot Wave 5 short term upcycle shortly thereafter. Ciao

..........................Yup, Weakness

NEM underperformed the XAU by a very bearish -0.83% yesterday on top of a bearish -0.67% on 11-21 and -0.44% on 11-18, so the NEM Lead Indicator correctly suggested that weakness was imminent.

The second short term cycle high of the monthly upcycle since 10-20-05 for HUI/XAU and since early November for NEM occurred yesterday and corresponds to Elliot Wave 3, so there should be one more tradable short term upcycle in this monthly upcycle, meaning that there should be one more higher short term cycle high before the monthly upcycle's parabolic shaped trendline breaks down.

XAU Implied Volatility portends weakness today, falling -1.26% from 28.50 on 11-21 to 28.14 yesterday vs a +0.87% rise in the XAU which is a +0.39% rise in complacency because the XAU wall of worry shrank by -0.39% yesterday. The XAU Put/Call Ratio experienced an unusually large (> 6%) rise in complacency today, falling to 0.58075 today from o.64752 yesterday, which portends strength/an uptrend for much of today's session following this early weakness.

The "Trade the Cycles" chart page is at http://www.joefrocks.com/GoldStockCharts.html and the "Trade the Cycles" web page is at http://www.joefrocks.com/TradetheCycles.html with the gold/silver stock work coming after the major averages. Ciao

Monthly Upcycle Elliot Wave 3 Short Term Cycle Highs May Have Occurred Today

NEM appears to have put in a short term cycle high early today at 47.74 while HUI and the XAU, lagging NEM as they typically do, were still rising at session's end and put in higher cycle highs than their early session cycle highs. HUI and the XAU may have peaked today or will probably do so tomorrow. NEM underperformed the XAU by a very bearish -0.83% today on top of a bearish -0.67% yesterday and -0.44% on 11-18, so the NEM Lead Indicator strongly suggests that weakness is imminent.

This second upcycle of the monthly upcycle since 10-20-05 for HUI/XAU and since early November for NEM, corresponding to Elliot Wave 3, is peaking now, and, there should be one more tradable short term upcycle in this monthly upcycle, which will be the Ellliot Wave 5 short term upcycle. If a higher short term cycle high occurs after Elliot Wave 5 it will probably do so as the monthly upcycle rolls over and the parabolic shaped monthly upcycle trendline has broken down.

...................Short Term Upcycle Is Peaking

Look at the 5 day HUI chart ( http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=b&p=&a=m26-12-9,p12,fs,w14&c= ) and one can see that the rate of ascent of the short term upcycle is decreasing. It appears that monthly upcycle Elliot Wave 3 short term cycle highs will probably occur today for HUI, NEM, and the XAU, and, the next and possibly final short term upcycle in Wave 5 may break through major resistance a bit below 50 for NEM.

The indicators portend weakness/a downtrend for much of today's session, but the short term upcycle is the most important consideration today, as long as it remains in effect. It's probably peaking today. The NEM Lead Indicator was very bearish yesterday at -0.67% versus the XAU. XAU Implied Volatility revealed a very sharp (3-6%) rise in complacency yesterday, plunging to 28.50 from 30.42 on 11-18 versus a +2.55% rise in the XAU yesterday. The XAU Put/Call Ratio revealed an unusually large (> 6%) rise in fear today which portends weakness, rising to 0.64752 today from 0.55947 yesterday. As I write this the NEM Lead Indicator is bullish by about +0.25%.

This has been one of the strongest short term upcycles I've ever seen. Last week NEM rose about 9% in a lttle over one session which is amazing, but much of the buying was short covering as evidenced by an 11.14 million share session.

HUI, NEM, and the XAU are in the sharply risng phase of the long term upcycle (began 5-10-04) since 5-16-05's major intermediate term cycle low. Please check out my home page
http://www.JoeFRocks.com/ for more info and the "Trade the Cycles" web page can be found there or at the right hand side of this Blog. Ciao

Why There Is Probably A Higher Short Term Cycle High After This One

Besides Elliot Wave, which suggests that there should be a higher short term cycle high in this monthly upcycle corresponding to Wave 5 after the one that will occur (or has occurred) in this short term upcycle that corresponds to Wave 3, is the fact that NEM hasn't exceeded it's prior monthly cycle high that occurred on 9-30-05 above 48. NEM should put in a monthly cycle high in this monthly upcycle well above the previous one.

So, NEM should put in a monthly cycle high probably in the low 50s, which makes things very interesting because NEM has major upside resistance in the 50 area, a bit below 50 connecting the cycle highs since the prior long term cycle high at 50.28 on 12-2-03. NEM may break through that resistance area in this monthly upcycle which is obviously something to watch.

Monthly Upcycle Elliot Wave 3 Still Peaking For HUI and the XAU

The indicators correctly portended early weakness today but then HUI, NEM, and the XAU shot up again in impressive fashion. The Elliot Wave 3 second short term upcycle of the monthly upcycle is probably peaking. Williams %R is extremely overbought at 0 for HUI/XAU and is near 0 for NEM. NEM's session high at 47.44 occurred very early in the session while HUI and the XAU peaked at session's end. If short term cycle highs occurred today then the fact that NEM peaked about 6 hours before HUI and the XAU indicates that NEM is leading to the downside.

NEM underperformed the XAU by a wide margin of -0.67% today, which on top of the -o.44% on Friday 11-18 suggests that weakness should soon set in and that today's cycle highs may be short term cycle highs.

.......................Monthly Upcycle Wave 3 Lives

It looks like HUI, NEM, and the XAU are putting in the second short term cycle high of the monthly upcycle (began on 10-20-05 for HUI/XAU and in early November for NEM) today, which are the Elliot Wave 3 short term cycle highs. The dramatic spike move last week was so strong that this early strength is probably the short term upcycle rolling over. William's %R very near 0 right now reveals an extremely overbought condition short term, which is another sign that the short term cycle is probably peaking as I write this. After the probably brief strength early today HUI, NEM, and the XAU should fill the downside gaps created at today's open and HUI is still likely to fill it's downside gap at 240.73 from 11-17 in the next few days, though probably a bit less likely than I thought yesterday.

All three indicators and the most recent gold/silver COT data point to weakness/a downtrend being the tone for most of today's session. So, this strength early today is probably an opportunity for short term cycle traders to exit. The XAU Put/Call Ratio fell over 5% today to 0.55947 from 0.58993 on 11-18 which is a very sharp rise in complacency that portends weakness/a downtrend for most of today's session. XAU Implied Volatility revealed a 5.82% rise in complacency on 11-18 that portends weakness/a downtrend for most of today's session. The NEM Lead Indicator was bearish on 11-18 at -0.44% which also points to weakness being the tone for most of today's session. The bottom line is that my most recent update's scenario is still likely (HUI filling it's downside gap at 240.73). There should be weakness for the next few days until a monthly upcycle Elliot Wave 4 short term cycle low occurs. Ciao

HUI's downside gap at 240.73 from 11-17 has yet to be filled

HUI's downside gap at 240.73 from 11-17 has yet to be filled. A likely scenario early this week is that HUI fills it's downside gap at 240.73, then puts in an Elliot Wave 4 short term cycle low (along with NEM and the XAU at about the same time) shortly thereafter, and then it's back to the races in the Elliot Wave 5 short term upcycle that could culminate in a monthly cycle high or at least will probably be the last tradable short term upcycle of this monthly upcycle. If there is a higher cycle high after the Elliot Wave 5 short term cycle high it will probably occur as the monthly upcycle rolls over after the parabolic shaped monthly upcycle trendline has broken down. Once HUI fills it's downside gap a reliable sign for short term cycle traders to look to go long is to wait for NEM to outperform the XAU by a wide margin (probably leading to the upside). The dramatic spike move last week that typically is followed by a sharp correction, the fact that NEM underperformed the XAU by a significant margin of -0.44% on Friday 11-18, Williams %R for HUI, NEM, , and the XAU is in overbought territory above -20, and that XAU Implied Volatility revealed a very sharp 5.82% rise in complacency on 11-18, all point to weakness on Monday 11-21.

........................Disclaimer

Joe Ferrazzano is not a registered investment advisor. Investing in stocks involves risk. Joe Ferrazzano is not a registered broker or dealer. Each investor has to ascertain what percentage if any of one's investments should be allocated to growth stocks or gold/silver stocks. Please see a financial planner, registered investment advisor or at least do your homework and decide what is right for your situation. Growth stocks and gold/silver stocks tend to be extremely volatile which creates opportunities but also can be very painful and risky. Each investor must take complete responsibility for his or her investing actions. Joe Ferrazzano should be considered as one source of information out of many from which to derive a decision on investing.

Monthly Upcycle Elliot Wave 4 Short Term Downcycle Appears To Still Be In Effect

NEM underperformed the XAU by -0.44% today, so NEM is probably leading to the downside, and, a short term cycle low appears likely early next week, probably occurring on Monday. NEM hit a monthly upcycle Elliot Wave 3 short term cycle high just after the open at 47.13, then put in a very short term cycle low at 45.84 just after 2.5 hours into the session.

Since short term downcycles typically last 1 to 3 days it's unlikely that 45.84 was a short term cycle low, since it would be a very brief 2.5 hour short term downcycle. Combined with the fact that NEM underperformed the XAU by -0.44% today, it's likely that HUI, NEM, and the XAU remain in short term downcycles. Ciao

..................Short Term Downcycle Duration

NEM just hit a short term cycle high at the open today at 47.13, so this short term downcycle should last until late today or into early next week, probably hitting a short term cycle low on Monday if one doesn't occur today. The next short term upcycle will be Elliot Wave 5 of the monthly upcycle, so that will probably be the last tradable short term upcycle of this monthly upcycle. In other words, there should be a short term cycle high in the next short term upcycle well above the one that just occurred.

The XAU Filled It's Downside Gap At 114.29

NEM should soon fill it's downside gap at 46.05, then the question is how much more downside to this short term downcycle, given that NEM is modestly outperforming the XAU today as I write this and was bullish yesterday at +0.35%. Probably not much, but, given the dramatic spike move that occurred, this may be a sharper short term downcycle/correction than expected. Spike moves usually give back about half their gains, though that probably won't occur this time, a sharp decline still may occur. Stay tuned!

Elliot Wave 4 Short Term Downcycle Probably In Progress

The second short term cycle high of the monthly upcycle (HUI and the XAU since 10-20-05 and NEM since early November) probably occurred yesterday for HUI/XAU and today right after the open at 47.13 versus 47.12 yesterday for NEM.

Given that NEM continues to outperform today the potential exists for an upside surprise here, meaning that the Wave 3 short term cycle highs may not have occurred yet. A I write this NEM actually has a very slight uptrend since early yesterday. The most likely scenario (80%+ probability) however is that NEM and the XAU fill their downside gaps at 46.05 and 114.29 today or Monday, which would mean that an Elliot Wave 4 short term downcycle is in progress. The likely explanation for NEM's short term cycle is that it hit an Elliot Wave 3 short term cycle high right after the open today at 47.13 versus 47.12 early yesterday, so it's short term upcycle rolled over dramatically the past day and should fill the downside gap at 46.05 very soon.

So, it appears likely that NEM and the XAU will fill downside gaps at 46.05 and 114.29 today or Monday. The NEM Lead Indicator continues to be bullish today since NEM is outperforming the XAU by a wide margin of +0.50% as I write this and was bullish yesterday at +0.35%, so this Elliot Wave 4 short term downcycle will probably be a brief and relatively shallow one, which makes sense cyclewise because HUI and the XAU's monthly upcycle is 4 weeks old and has obviously increased in strength as it should at this point in the monthly upcycle.

Both the XAU Put/Call Ratio, at 0.86572 (November expiration expires today) versus 0.80338 yesterday, which is an unusually large (> 6%) rise in fear that portends weakness today, and XAU Implied Volatility, at 32.065 yesterday versus 32.685 the day before versus a +1.41% rise in the XAU yesterday, which is a significant rise in complacency that portends weakness today since XAU Implied Volatility fell significantly more in % terms yesterday than the XAU rose, point to weakness today.

The reason why the XAU Put/Call Ratio and XAU Implied Volatility didn't work well if at all the past two days is because much of the huge spike move (NEM rose an amazing 9% in a little over one session) this week was due to unwinding of positions due to today's futures/options expiration. Short covering was a major factor as revealed by NEM's unusually large volume of 11.15 million shares on 11-16. Ciao

Monthly Upcycle Elliot Wave 4 Short Term Downcycle Baby

HUI, NEM, and the XAU appear to have hit Elliot Wave 3 short term cycle highs today with NEM and the NEM dominated XAU ( http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=b&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c= ) doing so very early in the session and HUI doing so much later in the session. All three had very flat sessions today (see 5 day XAU chart the the link above) after early strength/gaps up at the open.

It appears that NEM and the XAU will fill downside gaps at 46.05 and 114.29 tomorrow, then, the fact that the NEM Lead Indicator was bullish yet again today at +0.35% (NEM outperformed the XAU by that amount), indicates that the likely short term downcycle in effect now will probably be a relatively shallow one, so short term cycle traders like myself will have to be nimble Jack. It appears that there will be modest downside after the gaps get filled, then it's probably back to the races in the Elliot Wave 5 short term upcycle that could culminate in a monthly cycle high. Buckle up!

Monthly Upcycle Elliot Wave 3 May Be Over

The final spike of the monthly upcycle's (since 10-20-05 for HUI/XAU and early November for NEM) second short term upcycle appears to be occurring early today. NEM has risen an amazing 9% in a little over one session, with short covering and option expiration (tomorrow) almost certainly playing a major part (explains yesterday's 11+ million shares).

The NEM Lead Indicator was very bullish yesterday at +1.03% and is neutral as I write this. Both the XAU Put/Call Ratio, which rose sharply to 0.80338 today from 0.77426 yesterday, and XAU Implied Volatility, at 32.685 yesterday versus 34.075 the day before versus a +5.96% rise in the XAU yesterday, fell significantly less in % terms than the XAU rose which was a significant rise in fear yesterday, portend strength.

It appears however that the strength today will be brief, which isn't surprising given the huge spike move that began yesterday. NEM and the XAU have downside gaps created at today's open at 46.05 and 114.29 that will probably get filled in the next day or two. Buckle up!

Monster Day, NEM Outperformed the XAU By +1.03%

NEM was up +6.99% today and the XAU was up +5.96%. It was amazing the way reliable lead indicator NEM kept defying gravity today on huge volume of 11.14 million shares, double it's 3 month average daily volume of 5.51 million shares.

The NEM Lead Indicator was very bullish today at +1.03% which portends more strength tomorrow, but, HUI, NEM, and the XAU are extremely overbought, so it's unwise to chase this rally and short term cycle traders , and, maybe even monthly cycle traders, given how frothy the monthly upcycle has become, should look to sell. Something to remember also is that part of this is probably NEM playing catchup after taking a big hit due to the Placer Dome bid by Barrick.

......................Short Term Cycle Goes Parabolic

The second short term cycle high (Elliot Wave 3) of HUI/XAU's monthly upcycle since 10-20-05 (NEM's monthly upcycle since early November) appears likely by week's end and could occur today the way things are going. William's %R very near 0 is a sign for short term cycle traders to look to sell, since HUI, NEM, and the XAU are extremely overbought on a short term cycle basis.

NEM just hit it's Elliot Wave 2 short term cycle low yesterday, so, if NEM puts in a short term cycle high today, a day after a short term cycle low, that would be unusual, but that appears to be a definite possibility given it's dramatic spike move today. NEM is up a whopping +5.39% as I write this. When you see this type of move in NEM a cycle high usually isn't far behind. Keep in mind that one more and possibly two more higher short term cycle highs are likely in the current monthly upcycle after the short term cycle high that will probably occur by week's end. Buckle up!

Reliable Lead Indicator Newmont Mining Explodes!

NEM is going bananas today and the only news I've seen so far is shown below. Not sure why it's up over 4% solely on that news, unless it's a clear sign that they won't go after PDG. NEM is outperforming the XAU by well over 1% as I wrote this, so the NEM Lead Indicator is obviously very bullish early today. NEM outperformed the XAU by +0.46% yesterday, so strength/an uptrend today for a significant part of the session was likely.

"Newmont Mining Corp. of Canada Ltd. (NMC.T) has agreed to acquire, by private placement, 18.5 million stock-warrant units of Miramar Mining Corp. (MNG) at C$2.35 each, for a total investment of C$43.5 million. In a news release, Miramar said each unit consists of one share and one warrant, with each warrant exercisable for one additional share at C$2.75 for 48 months. Miramar said the share portion of the units represents about 9.9% of its outstanding shares after the sale of the units. If the warrants are exercised, Newmont will hold about an 18% stake in Miramar. The private placement is expected to close on or about Nov. 18, subject to formal documentation and all necessary regulatory and stock exchange approvals. The securities won't be registered under the U.S. Securities Act of 1933. Miramar said Newmont will acquire the units for investment purposes only."

The XAU Put/Call Ratio fell to 0.77426 today from 0.78301 yesterday which portends weakness/a downtrend for a significant part of today's session. Given the early dramatic spike move a downtrend for much of today's session would be likely even if all the indicators portended strength. XAU Implied Volatility also portends weakness/a downtrend for a significant part of today's session because it rose from 33.735 on 11-14 to 34.075 yesterday, but it rose significantly less in % terms than the XAU fell yesterday (-1.90%), so a significant rise in complacency occurred yesterday. Ciao

NEM Outperformed the XAU By +0.46% Today

It appears that NEM may have put in it's Elliot Wave 2 short term cycle low just before the close. NEM outperformed the XAU by a healthy margin of +0.46% today which portends strength/an uptrend tomorrow.

NEM Is Putting in an Elliot Wave 2 Short Term Cycle Low

NEM, which didn't hit a monthly cycle low until early November due to the the Placer Dome bid by Barrick, is actually in a Wave 2 short term downcycle of it's monthly upcycle, and, is trying to put in a short term cycle low today, not a very short term cycle low as I said earlier. So, the fact that NEM is lagging HUI/XAU, which hit monthly cycle lows on 10-20-05, is complicating things some. Once NEM bottoms HUI, NEM, and the XAU will all be in Wave 3 and will probably hit a short term cycle high this week or early next week. Ciao.

.............Trying to Find A Bottom

Once NEM puts in a very short term cycle low the strength indicated by the NEM Lead Indicator (outperforming the XAU today) and XAU Implied Volatility should kick in. The XAU Put/Call Ratio did correctly portend weakness today as did the NEM Lead Indicator, which was -0.24% vs the XAU yesterday.

Thoughts and Indications

HUI, NEM, and the XAU gapped up at the open and HUI/XAU already filled their downside gaps. Cyclewise, which is the primary consideration, it appears that the second short term cycle high of the monthly upcycle since 10-20-05 (HUI/XAU) will occur this week, which will be the Elliot Wave 3 short term cycle high, so there should be another higher short term cycle high corresponding to Wave 5 after this one.

Indications: NEM Lead Indicator was modestly bearish yesterday at -0.24% underperformance vs the XAU. Today however, NEM appears to be leading to the upside as it typically does, outperforming the XAU by a healthy +0.50%, so the NEM Lead Indicator is bullish today.

The XAU Put/Call Ratio fell to 0.78301 today from 0.79940 which portends weakness/ a downtrend for some of today's session, and the weakness is occurring early, so the potentially substantial strength indicated by XAU Implied Volatility and the fact that NEM is outperforming the XAU today point to strength for much of the session. XAU Implied Volatility rose nearly 5% yesterday to 33.735 from 32.215 on 11-11 vs a -1.20% decline in the XAU yesterday, which is a sharp rise in fear that portends strength for some of today's session.

The COT data released yesterday is bullish, portending strength accompanied by some weakness this week. The gold Commercial Traders continued to aggressively cover their shorts last week, but did liquidate a significant % of their long position, which points to some weakness this week.

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

......................Wave 3 Still In Progress!

A short term cycle high probably did not occur today, which means that the Wave 3 short term upcycle is probably still in progress and a higher short term cycle high, the Wave 5 short term cycle high of the monthly upcycle since 10-20-05, should occur after the Wave 3 short term cycle high that will probably occur this week.

The XAU is in very flat uptrend, see 5 day chart: http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=b&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c= , since bottoming a few hours into the session, so it appears that the XAU Put/Call Ratio and XAU Implied Volatility will correctly portend strength for most of the session and the NEM Lead Indicator, which was very bearish on Friday 11-11, correctly portended that the XAU and HUI would take a dive today.

Upside Gaps Filled and Elliot Wave

HUI, NEM, and the XAU filled the upside gaps created at the open, and, are taking a dive now, which isn't surprising given Friday's spike move and that NEM underperformed the XAU by a very wide margin of -1.08% on Friday 11-11.

NEM's very short term upcycle that began on Friday 11-11 did an Elliot Wave 1, 2, 3, 4, 5 upcycle on 11-11 and is doing an A, B, C correction early today. NEM is trying to put in a very short term cycle low as I write this. Once a very short term cycle low occurs the strength indicated by the XAU Put/Call Ratio and XAU Implied Volatility should "kick in." See the next discussion for today's indications.

11-14 Thoughts and Indications

HUI, NEM, and the XAU gapped down at the open and are likely to fill those upside gaps today, which means they should get into positive territory today simply due to gap filling. More good news is that the XAU Put/Call Ratio (Nov exp) rose very sharply (over 3%) today to 0.79940 from 0.7756 on Friday 11-11 which portends strength and potentially a big up day today. As discussed in the latest weekly update ( http://www.joefrocks.com/TradetheCycles.html scroll down past the major averages work), XAU Implied Volatility also portends strength today while the NEM Lead Indicator points to some weakness.

As I write this the NEM Lead Indicator is slightly bearish but that's expected given that a short term cycle high appears likely in the next day or so. Given that both the XAU Put/Call Ratio and XAU Implied Volatility portend strength today it appears that strength/an uptrend will be the tone for much of the session.

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. Ciao.

........................Disclaimer

Joe Ferrazzano is not a registered investment advisor. Investing in stocks involves risk. Joe Ferrazzano is not a registered broker or dealer. Each investor has to ascertain what percentage if any of one's investments should be allocated to growth stocks or gold/silver stocks. Please see a financial planner, registered investment advisor or at least do your homework and decide what is right for your situation. Growth stocks and gold/silver stocks tend to be extremely volatile which creates opportunities but also can be very painful and risky. Each investor must take complete responsibility for his or her investing actions. Joe Ferrazzano should be considered as one source of information out of many from which to derive a decision on investing.

11-11 Thoughts and Indications

HUI, NEM, and the XAU gapped up at the open then quickly fell and filled those gaps. The NEM Lead Indicator at -0.34% yesterday and at about -0.50% today as I write this portends weakness as does XAU Implied Volatility which fell to 32.72 yesterday from 33.075 the day before despite a -1.04% decline in the XAU yesterday, which is a significant rise in complacency that portends weakness. The XAU Put/Call Ratio (Nov expiration) rose to 0.77560 today from 0.77262 yesterday which portends strength. So, the indicators in concert with cycles (which are the primary market timing consideration) suggest early weakness today followed by strength.

Reliable lead indicator NEM has been doing an Elliot Wave A, B, C correction/very short term downcycle since hitting a very short term cycle high just after the open yesterday. Once NEM "resumes" it's short term upcycle, probably today, gold/silver stocks should be off to the races again.

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.

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

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

..................Elliot Wave

HUI, NEM, and the XAU appear to have completed short term cycles late yesterday (began early on Friday 11-4, see 5 day Yahoo chart below), and, did an Elliot Wave A, B, C down, up down correction, which means that a short term upcycle probably began just before yesterday's close. 5 day Yahoo charts by the way are a highly useful tool I use daily to gauge short term and some times, nearing turning points, monthly cycles.

http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=b&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=

11-9 Thoughts

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.

NEM underperformed the XAU yesterday by a wide margin of -0.50% but is outperforming today as I write this by about +0.25%, so for the week the NEM Lead Indicator is about +0.50% after being +1.82% from Tuesday thru Friday last week, so the NEM Lead Indicator is bullish as it should be at this point in the monthly cycle. The XAU Put/Call Ratio (Nov expiration) rose to 0.80729 today from 0.80128 yesterday, which correctly indicated strength/an uptrend today, at least early on. XAU Implied Volatility however fell modestly to 33.08 at yesterday's close from 33.205 at 11-7's close versus a slight -0.22% decline in the XAU yesterday, so XAU Implied Volatility reveals a modest rise in complacency yesterday that portends weakness/a downtrend for some of today's session, and, HUI, NEM, and the XAU have downside gaps created at today's open that may get filled.

A big thing to watch now as I said yesterday is that HUI and the XAU appear to be on the verge of breaking above their downtrend lines since the 9-30-05 monthly cycle highs. So, they could be about to make a big move in the next week or so, which is exactly what should happen given the monthly cycle buy signals that occurred on 10-24-05 for HUI, NEM, and the XAU, when they had more than 2% follow through after breaking their parabolic shaped monthly downcycle trendlines. See monthly cycle buy signals at http://www.joefrocks.com/GoldStockCharts.html

Tuesday 11-8 Thoughts

The assessment in my latest weekly update ( http://www.joefrocks.com/TradetheCycles.html scroll down past the major averages work) remains unchanged. NEM outperformed the XAU by a wide margin of +0.62% on Monday 11-7 but on Tuesday 11-8 NEM underperformed the XAU by -0.50%, so the NEM Lead Indicator is slightly bullish so far this week after being bullish from Tuesday thru Friday last week, when NEM outperformed the XAU by +1.82%. The XAU Put/Call Ratio is at 0.80128 as of 11-8 and XAU Implied Volatility is at 33.205 as of 11-7 (is updated late at night for that day).

A big thing to watch now is that HUI and the XAU appear to be on the verge of breaking above their downtrend lines since the 9-30-05 monthly cycle highs. So, they could be about to make a big move in the next week or so, which is exactly what should happen given the monthly cycle buy signals that occurred on 10-24-05, when they had more than 2% follow through after breaking their parabolic shaped monthly downcycle trendlines. See monthly cycle buy signals at http://www.joefrocks.com/GoldStockCharts.html

Welcome to my Trade the Cycles Blog

Hello, I'm Joe Ferrazzano and my "Trade the Cycles" market timing system/work appears at http://www.joefrocks.com/TradetheCycles.html My home page is http://www.JoeFRocks.com/

The market I actively trade is gold/silver stocks. It's a great market to trade or invest in. It's a true Bull Market/very long term upcycle since late 2000 for gold/silver stocks and since April 2001 for gold/late 2001 for silver. I plan to regularly (hopefully on most trading days) post my thoughts about gold/silver stocks, the metals, occasionally the major averages which I also time but rarely trade, and other subjects as well.