SPX (S & P 500) Weakness Today Led To Gold/Silver Stock Weakness And Gap Filling Action
SPX is a huge factor because it drives index fund trading that profoundly affects many indexes, which makes the Fed's lending activity to index fund traders a huge factor, accounting for the strength in most indexes the past few weeks. The Fed's lending (see link) that drives index fund trading was well below the recent +$12.00 Billion daily average on Friday (+$5.75 Billion Repo), on Monday (+$7.00 Billion Repo), and yesterday & Tuesday were goose eggs altogether, which correctly pointed to weakness. Today's is a large $10 Billion so far which may have been needed to prevent an outright crash, due to going from massive lending in recent weeks to zero for two days and well below average the prior two days. http://www.newyorkfed.org/markets/omo/dmm/temp.cfm
The Fed has changed gears in a big way the past four days so a substantial decline is likely soon given that HUI, NEM, and the XAU probably hit minor int term cycle highs this week, which is the primary consideration. They are probably important (though not major/final which would be Elliot Wave 5) Elliot Wave 3 cycle highs for the major upcycle since 5-16-05. So, the Elliot Wave 4 downcycle of the major int term upcycle since 5-16-05 has probably begun. See 1 year HUI chart dated 1-6-06 at http://www.joefrocks.com/GoldStockCharts.html for the Elliot Wave points. If so a 15-25% correction is likely in the next 2-4 weeks for HUI, NEM, and the XAU.
The NEM Lead Indicator, XAU Implied Volatility, and the XAU Put/Call Ratio all point to some strength today after early weakness. Keep in mind that indicators portend more strength in upcycles versus downcycles. Cycles are the primary consideration.
NEM has downside gaps to fill at 56.66 from 1-6, at 53.40 from 1-3, at 51.59 fron 12-28, at 50.45 from 12-22, and at 48.75 from 12-7, and, the XAU has downside gaps 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.
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 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.
The NEM Lead Indicator is bullish right now at about +0.55% vs the XAU and was a bullish +0.46% yesterday. 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.
XAU Implied Volatility rose +0.29% to 33.190 on Wednesday 1-11 from 33.095 on 1-10 versus a -0.05% decline in the XAU on 1-11, which is a slight (up to 0.24%) +0.24% rise in fear (+0.29% + -0.05% = +0.24%. The XAU wall of worry grew by +0.24%, therefore fear rose by +0.24%) that portends strength/an uptrend during part of Thursday 1-12's session.
The XAU Put/Call Ratio rose a very sharp (3-6%) +4.09% today to 1.08673 from 1.04400 on 1-10 which portends some strength today because it's a very sharp (3-6%) rise in fear.
The latest COT data (as of 1-3-06) is modestly bullish short term since the gold Commercial Traders traded net long and the gold Speculators traded net short, which jives with gold being in (or having been in at the time the data was released) Elliot Wave B up of an Elliot Wave A, B, C minor intermediate term downcycle (see 1 year chart), but the significant short selling by the Commercial Traders points to some short term weakness. The gold Commercial Traders added a large 6357 (sold 1381, 8157 the prior two weeks, added 11,405 the prior week, sold 14,042 the prior week, added 17,312 the prior week) long futures and options contracts and added 3299 (covered 2036 the prior week, added 4202, 2623 the prior two weeks, covered 5276 the prior week) short futures and options contracts which portends strength this week (non contrarian indicator), but the significant short selling points to some weakness. The gold Speculators (hedge funds and other speculators/traders) added 1521 (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) 5824 (covered 1535, 7432, 8720 the prior three weeks, added 566, 2309 the prior two 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 below). Ciao
The Fed has changed gears in a big way the past four days so a substantial decline is likely soon given that HUI, NEM, and the XAU probably hit minor int term cycle highs this week, which is the primary consideration. They are probably important (though not major/final which would be Elliot Wave 5) Elliot Wave 3 cycle highs for the major upcycle since 5-16-05. So, the Elliot Wave 4 downcycle of the major int term upcycle since 5-16-05 has probably begun. See 1 year HUI chart dated 1-6-06 at http://www.joefrocks.com/GoldStockCharts.html for the Elliot Wave points. If so a 15-25% correction is likely in the next 2-4 weeks for HUI, NEM, and the XAU.
The NEM Lead Indicator, XAU Implied Volatility, and the XAU Put/Call Ratio all point to some strength today after early weakness. Keep in mind that indicators portend more strength in upcycles versus downcycles. Cycles are the primary consideration.
NEM has downside gaps to fill at 56.66 from 1-6, at 53.40 from 1-3, at 51.59 fron 12-28, at 50.45 from 12-22, and at 48.75 from 12-7, and, the XAU has downside gaps 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.
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 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.
The NEM Lead Indicator is bullish right now at about +0.55% vs the XAU and was a bullish +0.46% yesterday. 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.
XAU Implied Volatility rose +0.29% to 33.190 on Wednesday 1-11 from 33.095 on 1-10 versus a -0.05% decline in the XAU on 1-11, which is a slight (up to 0.24%) +0.24% rise in fear (+0.29% + -0.05% = +0.24%. The XAU wall of worry grew by +0.24%, therefore fear rose by +0.24%) that portends strength/an uptrend during part of Thursday 1-12's session.
The XAU Put/Call Ratio rose a very sharp (3-6%) +4.09% today to 1.08673 from 1.04400 on 1-10 which portends some strength today because it's a very sharp (3-6%) rise in fear.
The latest COT data (as of 1-3-06) is modestly bullish short term since the gold Commercial Traders traded net long and the gold Speculators traded net short, which jives with gold being in (or having been in at the time the data was released) Elliot Wave B up of an Elliot Wave A, B, C minor intermediate term downcycle (see 1 year chart), but the significant short selling by the Commercial Traders points to some short term weakness. The gold Commercial Traders added a large 6357 (sold 1381, 8157 the prior two weeks, added 11,405 the prior week, sold 14,042 the prior week, added 17,312 the prior week) long futures and options contracts and added 3299 (covered 2036 the prior week, added 4202, 2623 the prior two weeks, covered 5276 the prior week) short futures and options contracts which portends strength this week (non contrarian indicator), but the significant short selling points to some weakness. The gold Speculators (hedge funds and other speculators/traders) added 1521 (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) 5824 (covered 1535, 7432, 8720 the prior three weeks, added 566, 2309 the prior two 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 below). Ciao
posted by Joe Ferrazzano at
6:52 AM
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