NEM Outperformed The XAU By +0.92% Today BUT
HUI, NEM, and the XAU are very overbought. A lot of today's strength may have been unwinding of positions/short covering ahead of tomorrow's Fed meeting. It definitely seems like an important cycle high is in the process of occurring, which probably is the major upcycle's (since 5-16-05) Elliot Wave 3 cycle high. A 20-30% correction lasting 4-10 weeks, probably Wave 4, is likely to begin very soon. As a trader there's far too much risk to be long right now, even though the NEM Lead Indicator portends a potentially sharp rise tomorrow. The uncertainty of the Fed meeting is also obviously a major negative right now.
posted by Joe Ferrazzano at
1:25 PM
4 Comments:
Alice,
The 2% sell signal on the 18th indicated that risk was too high to trade long from a MONTHLY cycle perspective. There's no way to predict that the Fed would spike the punch last Thursday with $23 Billion in Repos in 1 day. From a monthly cycle traders standpoint risk is too high to be long now. My system isn't about short term predictions, which are impossible due to Fed lending. Ciao
By
Joe Ferrazzano, at 2:34 PM
Andy,
As I said, this is probably the major upcycle's (since 5-16-05) Elliot Wave 3 cycle high that's imminent. See the NEM 1 year chart dated 1-20-06 to see how I arrived at 9-30-05 being the Wave 1 cycle high and therefore this one is Wave 3.
By
Joe Ferrazzano, at 2:39 PM
Alice, other major warning signs that risk was high short term (last week and today) was that NEM underperformed the XAU by well over 4% two weeks ago, which is obviously very bearish, and, the gold Commercial Traders shorted over 11,000 futures/options contracts two weeks ago.
By
Joe Ferrazzano, at 2:51 PM
Andy,
I forgot to say: thanks for the kind words and please tell your friends about this Blog and my site/work/system. Ciao
By
Joe Ferrazzano, at 3:15 PM
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