Gold/Silver Stocks Fell Off A Cliff After An Early Spike Move
NEM filled it's upside gap at 58.85 from 1-18 and even threatened to make a run at it's 1-17 cycle high above 60, but it looks like that cycle high will hold and that NEM's major upcycle (since 5-16-05) Elliot Wave 4 down began on 1-17-06. Often important cycle highs/lows occur after a gap has been filled, and that appears to be the case today. After that gap got filled early today NEM fell from a high at 59.70 to a low so far at 58.23, which is a -2.46% decline in about 10 minutes.
HUI/XAU probably finally hit major upcycle (since 5-16-05) Wave 3 cycle highs today. Yesterday's massive $23 Billion in Repos and the 5 prior days $50.50 Billion from the Fed was the factor that led to most of the upside after 1-17's HUI/XAU cycle highs. See http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE
However, Federal Reserve Bank Credit for the week ending 1-25 fell -$4.476 Billion, see http://www.federalreserve.gov/releases/h41/Current/ , which portends a very sharp decline the next few days, that appears to have begun after today's early spike move.
Gaps complement cycles, so often you know what's likely to happen because of them. NEM and the XAU appear to be headed toward downside gaps at 56.97 and 141.29 created on 1-25.
The XAU Put/Call Ratio fell dramatically today, which was an unusually large rise in complacency that correctly portended very brief strength, but the lower fear level also points to weakness soon, because it's a much more complacent level. XAU Implied Volatility also correctly portended some strength today. The NEM Lead Indicator is a bearish -0.65% right now versus the XAU after being a bearish-0.27% yesterday, a slightly bullish +0.05% on Wednesday, a bearish -0.33% on 1-24, and a slightly bullish +0.18% on Monday. A 2% monthly cycle sell signal occurred on Wednesday 1-18. If Elliot Wave 3 minor int term cycle highs occurred for HUI/XAU today, then there's probably 4-10 weeks and greater than 20% downside from the cycle highs, corresponding to the major upcycle's (since 5-16-05) Wave 4. NEM hit a Wave 3 cycle high on 1-17, leading to the downside because it's a component of the S & P 500 (SPX), which drives index fund trading.
See http://www.joefrocks.com/TradetheCycles.html for the weekly update. Scroll down a few pages past the major averages work to see the gold/silver stock work. See http://www.joefrocks.com/GoldStockCharts.html for all the charts. My home page is http://www.JoeFRocks.com/ I hope you'll take the time to e mail your friends re this Blog and my site/work/system. This will help to keep my work free, because the more visitors I get the more advertising $ I make. I have a long way to go but have made significant progress in recent months. Thank you.
There should be downside gap filling next week since the major upcycle's Elliot Wave 3 for HUI and the XAU should turn down and NEM underperformed the XAU last week by a very bearish -4.36%. Wave 4 is likely to last 4 to 10 weeks and have declines greater than 20%. The previous parabolic major upcycle's Wave 4 down lasted 7 weeks and the XAU fell -25.11%, from 82.89 on 1-24-03 to 62.08 on 3-13-03 (same timeframe!), then a double bottom occurred about two weeks later, so it was a long correction and a very flat start to Wave 5 in the previous parabolic major upcycle.
Today's Fed Credit so far is a relatively modest $5.75 Billion 3 day Repo after a very large $13 Billion 1 day Repo and a large $10 Billion 14 day Repo yesterday, a respectable +$7 Billion on Wednesday ( http://www.newyorkfed.org/markets/omo/dmm/temp.cfm ), a respectable +$7 Billion on 1-24, and a large $10.00 Billion 1 day Repo on Monday, which has had the effect of propping up more than spiking. Federal Reserve Bank Credit appears to be a very reliable short term cycle indicator (based on backtesting) when it has a substantial weekly change or a very large daily change, but cycles are the primary consideration by far. See http://www.joefrocks.com/GoldStockCharts.html for HUI and NEM's latest 1 year charts that show the Elliot Wave Points.
NEM has downside gaps to fill at 56.97 from 1-25, at 53.40 from 1-3, at 51.59 from 12-28, at 50.45 from 12-22, and at 48.75 from 12-7, and, the XAU has downside gaps at 141.29 from 1-25, at 137.64 from 1-19, at 135.39 from 1-6, at 128.03 from 1-3, at 124.36 from 12-28, and at 122.49 from 12-22. Often cycle highs or lows will occur shortly after gaps get filled, so one needs to track gaps closely. If gaps don't get filled that can be a bearish or bullish sign, as occurred recently when NEM twice closely approached (daily cycle lows at 48.88 and 48.89) but didn't fill it's downside gap at 48.75, then the recent explosive rally occurred.
http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=b&p=&a=m26-12-9,m26-12-9,p12,m26-12-9,p12,fs,m26-12-9,p12,fs,w14&c=NEM,%5EXAU,%5EHUI SPX drives index funds which have a profound affect on the short term/weekly and monthly movements of many sectors, including gold/silver stocks. Rapid very modest % moves in SPX generally cause rapid significant moves in NEM and other gold/silver stocks in the many indices affected by SPX. The largest traders of NEM and other gold/silver stocks found in the various indexes are index fund traders, AND, they tend to trade at THE SAME TIME or nearly so, which is huge. The cycles are vastly different for gold/silver stocks and SPX since gold/silver stocks are in a very long term upcycle since Oct/Nov 2000 and SPX is in a very long term downcycle since March 2000.
XAU Implied Volatility fell -0.74% to 34.920 on Thursday 1-26 from 35.180 on 1-25 versus a +1.37% rise in the XAU on 1-26, which is a significant (0.50-1.99%) +0.63% rise in fear (-0.74% + +1.37% = +0.63%. The XAU wall of worry grew by +0.63%, therefore fear rose by +0.63%) that correctly portended strength/an uptrend during part of Friday 1-27's session.
The XAU Put/Call Ratio fell an unusually large (> 6%) -10.30% today to 1.19527 from 1.33250 on 1-26 which correctly portended some strength today because it's an unusually large (> 6%) rise in complacency.
The latest COT data (as of 1-17-06) is bearish short term since the gold Commercial Traders traded an unusually large long position and the gold Speculators traded an unusually large short position, both of which portend weakness for at least part of this week. Keep in mind that the data is three days old when released. The gold Commercial Traders added an unusually large (> 10% increase in long contracts) 10,554 (added 13,289, 6357 the prior two weeks, sold 1381, 8157 the prior two weeks, added 11,405 the prior week, sold 14,042 the prior week) long futures and options contracts and added a large 11,306 (added 4626, 3299 the prior two weeks, covered 2036 the prior week, added 4202, 2623 the prior two weeks) short futures and options contracts which portends weakness this week (non contrarian indicator), because the unusually large long trade is a short term contrarian indication and the aggressive short selling also points to weakness. The gold Speculators (hedge funds and other speculators/traders) added 5541 (added 2975, 1521 the prior two weeks, sold 3988, 5112, 19,247 the prior three weeks, added 9102 the prior week, sold 2697 the prior week) long futures and options contracts and added an unusually large (> 10% increase in short contracts) 3743 (added 9445, 5824 the prior two weeks, covered 1535, 7432, 8720 the prior three weeks) short futures and options contracts which portends weakness this week (contrarian indicator), because the unusually large short selling is a short term non contrarian indication. The most important consideration in timing any market is the cycle channels/trendlines (see charts).
See http://www.joefrocks.com/TradetheCycles.html for the weekly update. Scroll down a few pages past the major averages work to see the gold/silver stock work. See http://www.joefrocks.com/GoldStockCharts.html for all the charts. My home page is http://www.JoeFRocks.com/ I hope you'll take the time to e mail your friends re this Blog and my site/work/system. This will help to keep my work free, because the more visitors I get the more advertising $ I make. I have a long way to go but have made significant progress in recent months. Thank you.
HUI/XAU probably finally hit major upcycle (since 5-16-05) Wave 3 cycle highs today. Yesterday's massive $23 Billion in Repos and the 5 prior days $50.50 Billion from the Fed was the factor that led to most of the upside after 1-17's HUI/XAU cycle highs. See http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE
However, Federal Reserve Bank Credit for the week ending 1-25 fell -$4.476 Billion, see http://www.federalreserve.gov/releases/h41/Current/ , which portends a very sharp decline the next few days, that appears to have begun after today's early spike move.
Gaps complement cycles, so often you know what's likely to happen because of them. NEM and the XAU appear to be headed toward downside gaps at 56.97 and 141.29 created on 1-25.
The XAU Put/Call Ratio fell dramatically today, which was an unusually large rise in complacency that correctly portended very brief strength, but the lower fear level also points to weakness soon, because it's a much more complacent level. XAU Implied Volatility also correctly portended some strength today. The NEM Lead Indicator is a bearish -0.65% right now versus the XAU after being a bearish-0.27% yesterday, a slightly bullish +0.05% on Wednesday, a bearish -0.33% on 1-24, and a slightly bullish +0.18% on Monday. A 2% monthly cycle sell signal occurred on Wednesday 1-18. If Elliot Wave 3 minor int term cycle highs occurred for HUI/XAU today, then there's probably 4-10 weeks and greater than 20% downside from the cycle highs, corresponding to the major upcycle's (since 5-16-05) Wave 4. NEM hit a Wave 3 cycle high on 1-17, leading to the downside because it's a component of the S & P 500 (SPX), which drives index fund trading.
See http://www.joefrocks.com/TradetheCycles.html for the weekly update. Scroll down a few pages past the major averages work to see the gold/silver stock work. See http://www.joefrocks.com/GoldStockCharts.html for all the charts. My home page is http://www.JoeFRocks.com/ I hope you'll take the time to e mail your friends re this Blog and my site/work/system. This will help to keep my work free, because the more visitors I get the more advertising $ I make. I have a long way to go but have made significant progress in recent months. Thank you.
There should be downside gap filling next week since the major upcycle's Elliot Wave 3 for HUI and the XAU should turn down and NEM underperformed the XAU last week by a very bearish -4.36%. Wave 4 is likely to last 4 to 10 weeks and have declines greater than 20%. The previous parabolic major upcycle's Wave 4 down lasted 7 weeks and the XAU fell -25.11%, from 82.89 on 1-24-03 to 62.08 on 3-13-03 (same timeframe!), then a double bottom occurred about two weeks later, so it was a long correction and a very flat start to Wave 5 in the previous parabolic major upcycle.
Today's Fed Credit so far is a relatively modest $5.75 Billion 3 day Repo after a very large $13 Billion 1 day Repo and a large $10 Billion 14 day Repo yesterday, a respectable +$7 Billion on Wednesday ( http://www.newyorkfed.org/markets/omo/dmm/temp.cfm ), a respectable +$7 Billion on 1-24, and a large $10.00 Billion 1 day Repo on Monday, which has had the effect of propping up more than spiking. Federal Reserve Bank Credit appears to be a very reliable short term cycle indicator (based on backtesting) when it has a substantial weekly change or a very large daily change, but cycles are the primary consideration by far. See http://www.joefrocks.com/GoldStockCharts.html for HUI and NEM's latest 1 year charts that show the Elliot Wave Points.
NEM has downside gaps to fill at 56.97 from 1-25, at 53.40 from 1-3, at 51.59 from 12-28, at 50.45 from 12-22, and at 48.75 from 12-7, and, the XAU has downside gaps at 141.29 from 1-25, at 137.64 from 1-19, at 135.39 from 1-6, at 128.03 from 1-3, at 124.36 from 12-28, and at 122.49 from 12-22. Often cycle highs or lows will occur shortly after gaps get filled, so one needs to track gaps closely. If gaps don't get filled that can be a bearish or bullish sign, as occurred recently when NEM twice closely approached (daily cycle lows at 48.88 and 48.89) but didn't fill it's downside gap at 48.75, then the recent explosive rally occurred.
http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=b&p=&a=m26-12-9,m26-12-9,p12,m26-12-9,p12,fs,m26-12-9,p12,fs,w14&c=NEM,%5EXAU,%5EHUI SPX drives index funds which have a profound affect on the short term/weekly and monthly movements of many sectors, including gold/silver stocks. Rapid very modest % moves in SPX generally cause rapid significant moves in NEM and other gold/silver stocks in the many indices affected by SPX. The largest traders of NEM and other gold/silver stocks found in the various indexes are index fund traders, AND, they tend to trade at THE SAME TIME or nearly so, which is huge. The cycles are vastly different for gold/silver stocks and SPX since gold/silver stocks are in a very long term upcycle since Oct/Nov 2000 and SPX is in a very long term downcycle since March 2000.
XAU Implied Volatility fell -0.74% to 34.920 on Thursday 1-26 from 35.180 on 1-25 versus a +1.37% rise in the XAU on 1-26, which is a significant (0.50-1.99%) +0.63% rise in fear (-0.74% + +1.37% = +0.63%. The XAU wall of worry grew by +0.63%, therefore fear rose by +0.63%) that correctly portended strength/an uptrend during part of Friday 1-27's session.
The XAU Put/Call Ratio fell an unusually large (> 6%) -10.30% today to 1.19527 from 1.33250 on 1-26 which correctly portended some strength today because it's an unusually large (> 6%) rise in complacency.
The latest COT data (as of 1-17-06) is bearish short term since the gold Commercial Traders traded an unusually large long position and the gold Speculators traded an unusually large short position, both of which portend weakness for at least part of this week. Keep in mind that the data is three days old when released. The gold Commercial Traders added an unusually large (> 10% increase in long contracts) 10,554 (added 13,289, 6357 the prior two weeks, sold 1381, 8157 the prior two weeks, added 11,405 the prior week, sold 14,042 the prior week) long futures and options contracts and added a large 11,306 (added 4626, 3299 the prior two weeks, covered 2036 the prior week, added 4202, 2623 the prior two weeks) short futures and options contracts which portends weakness this week (non contrarian indicator), because the unusually large long trade is a short term contrarian indication and the aggressive short selling also points to weakness. The gold Speculators (hedge funds and other speculators/traders) added 5541 (added 2975, 1521 the prior two weeks, sold 3988, 5112, 19,247 the prior three weeks, added 9102 the prior week, sold 2697 the prior week) long futures and options contracts and added an unusually large (> 10% increase in short contracts) 3743 (added 9445, 5824 the prior two weeks, covered 1535, 7432, 8720 the prior three weeks) short futures and options contracts which portends weakness this week (contrarian indicator), because the unusually large short selling is a short term non contrarian indication. The most important consideration in timing any market is the cycle channels/trendlines (see charts).
See http://www.joefrocks.com/TradetheCycles.html for the weekly update. Scroll down a few pages past the major averages work to see the gold/silver stock work. See http://www.joefrocks.com/GoldStockCharts.html for all the charts. My home page is http://www.JoeFRocks.com/ I hope you'll take the time to e mail your friends re this Blog and my site/work/system. This will help to keep my work free, because the more visitors I get the more advertising $ I make. I have a long way to go but have made significant progress in recent months. Thank you.
posted by Joe Ferrazzano at
7:19 AM
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