SPX (S & P 500) Firm Early And SPX Component NEM, HUI, XAU Are Also
The Federal Reserve Bank Credit induced spike (see recent posts) is still heading up thanks to a large +$6.393 Billion Federal Reserve Bank Credit increase in the Week Ending 1-4-06 which is fueling index fund buying. The Fed has spiked the punch the past three weeks with a +$5.554 Billion increase three weeks ago and a +9.225 Billion increase two weeks ago. Federal Reserve Bank Credit is obviously a great new indicator because I discovered what fuels the very important index fund trading. HUI, NEM, and the XAU took out Tuesday's cycle highs which means that the minor int term upcycle remains intact but "should" peak very soon.
XAU Implied Volatility points to strength today and there were upside gaps to fill created at yesterday's open. The XAU Put/Call Ratio and the NEM Lead Indicator point to weakness as discussed later, so it looks like weakness will set in soon.
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. 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 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.
The NEM Lead Indicator is bearish right now at about -0.50% vs the XAU, so NEM, HUI, and the XAU may fall today after early strength. HUI, NEM, and the XAU are very overbought if you looked at Williams %R near 0, RSI, and stochastics. The New Year's spike move was dumb money/mindless index fund buying which also led to short covering. The best time to buy is after a 10-15% plunge and a minor int term cycle low has occurred near or at an oversold condition, not at very overbought levels.
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.
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 Rapid very modest % moves in SPX cause rapid significant moves in NEM and other gold/silver stocks in the many indices affected by SPX.
The NEM Lead Indicator is bearish right now at about -0.50% vs the XAU after being slightly bearish yesterday at -0.24%, -0.07% vs the XAU on 1-4, bullish on 1-3 at +0.72%, and bullish on Friday at +0.64% vs the XAU. Keep in mind that indicators portend more strength in upcycles versus downcycles.
XAU Implied Volatility rose +2.44% to 32.540 on Thursday 1-5 from 31.765 on 1-4 versus a -2.14% decline in the XAU on 1-5, which is a modest (0.25-0.49%) 0.30% rise in fear (+2.44% + -2.14% = +0.30%. The XAU wall of worry grew by +0.30%, therefore fear rose by +0.30%) that portends strength/an uptrend during part of Friday 1-6's session.
The XAU Put/Call Ratio fell a very sharp (3-6%) -3.23% today to 1.03654 from 1.07113 on 1-5 which portends some weakness today because it's a very sharp (3-6%) rise in complacency.
The latest COT (Commitments Of Traders) data is modestly bullish (as of 12-27-05) short term since the gold Commercial Traders traded net long and the gold Speculators traded net short, which jives with gold being in Elliot Wave B up of an Elliot Wave A, B, C minor intermediate term downcycle (see 1 year chart), but the significant long liquidation by the Commercial Traders points to some short term weakness. The gold Commercial Traders sold 1381 (sold 8157 the prior week, added 11,405 the prior week, sold 14,042 the prior week, added 17,312 the prior week) long futures and options contracts and covered 2036 (added 4202, 2623 the prior two weeks, covered 5276 the prior week, added 16,229 the prior week) short futures and options contracts which portends strength this week (non contrarian indicator), but the significant long liquidation points to some weakness. The gold Speculators (hedge funds and other speculators/traders) sold 3988 (sold 5112, 19,247 the prior two weeks, added 9102 the prior week, sold 2697 the prior week) long futures and options contracts and covered 1535 (covered 7432, 8720 the prior two weeks, added 566, 2309 the prior two weeks) short futures and options contracts which portends strength this week (contrarian indicator). The most important consideration in timing any market is the cycle channels/trendlines (see charts below). Ciao
XAU Implied Volatility points to strength today and there were upside gaps to fill created at yesterday's open. The XAU Put/Call Ratio and the NEM Lead Indicator point to weakness as discussed later, so it looks like weakness will set in soon.
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. 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 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.
The NEM Lead Indicator is bearish right now at about -0.50% vs the XAU, so NEM, HUI, and the XAU may fall today after early strength. HUI, NEM, and the XAU are very overbought if you looked at Williams %R near 0, RSI, and stochastics. The New Year's spike move was dumb money/mindless index fund buying which also led to short covering. The best time to buy is after a 10-15% plunge and a minor int term cycle low has occurred near or at an oversold condition, not at very overbought levels.
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.
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 Rapid very modest % moves in SPX cause rapid significant moves in NEM and other gold/silver stocks in the many indices affected by SPX.
The NEM Lead Indicator is bearish right now at about -0.50% vs the XAU after being slightly bearish yesterday at -0.24%, -0.07% vs the XAU on 1-4, bullish on 1-3 at +0.72%, and bullish on Friday at +0.64% vs the XAU. Keep in mind that indicators portend more strength in upcycles versus downcycles.
XAU Implied Volatility rose +2.44% to 32.540 on Thursday 1-5 from 31.765 on 1-4 versus a -2.14% decline in the XAU on 1-5, which is a modest (0.25-0.49%) 0.30% rise in fear (+2.44% + -2.14% = +0.30%. The XAU wall of worry grew by +0.30%, therefore fear rose by +0.30%) that portends strength/an uptrend during part of Friday 1-6's session.
The XAU Put/Call Ratio fell a very sharp (3-6%) -3.23% today to 1.03654 from 1.07113 on 1-5 which portends some weakness today because it's a very sharp (3-6%) rise in complacency.
The latest COT (Commitments Of Traders) data is modestly bullish (as of 12-27-05) short term since the gold Commercial Traders traded net long and the gold Speculators traded net short, which jives with gold being in Elliot Wave B up of an Elliot Wave A, B, C minor intermediate term downcycle (see 1 year chart), but the significant long liquidation by the Commercial Traders points to some short term weakness. The gold Commercial Traders sold 1381 (sold 8157 the prior week, added 11,405 the prior week, sold 14,042 the prior week, added 17,312 the prior week) long futures and options contracts and covered 2036 (added 4202, 2623 the prior two weeks, covered 5276 the prior week, added 16,229 the prior week) short futures and options contracts which portends strength this week (non contrarian indicator), but the significant long liquidation points to some weakness. The gold Speculators (hedge funds and other speculators/traders) sold 3988 (sold 5112, 19,247 the prior two weeks, added 9102 the prior week, sold 2697 the prior week) long futures and options contracts and covered 1535 (covered 7432, 8720 the prior two weeks, added 566, 2309 the prior two weeks) short futures and options contracts which portends strength this week (contrarian indicator). The most important consideration in timing any market is the cycle channels/trendlines (see charts below). Ciao
posted by Joe Ferrazzano at
6:53 AM
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