...........It's The Fed's Punch Spiking Thursday
The Fed spiked the index fund trader punch today with a massive $12.25 Billion 1 day Repo and a $7 Billion 14 day Repo after a large $9.25 Billion 1 day Repo yesterday, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, which is providing a lot of fuel for index fund traders that's boosting SPX (S & P 500), which in turn boosts many other indexes such as HUI and the XAU, and, stocks that are components of indexes such as NEM. Today's SPX strength is a major factor behind HUI, NEM, and the XAU's strength, just as the recent huge decline was driven in large part by SPX weakness. Index fund trading is a huge factor that most are unaware of.
Notice how closely the XAU tracked SPX (S & P 500) recently: http://finance.yahoo.com/q/ta?t=5d&s=%5EXAU&l=off&z=m&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=&c=%5EGSPC.
The NEM Lead Indicator was a bearish -0.37% vs the XAU yesterday, was a very bullish +2.06% vs the XAU on 6-13 and was a very bullish +1.29% on 6-12. The NEM Lead Indicator was a very bullish +3.54% vs the XAU last week. So, a substantial rebound is likely over the next few weeks, and, cycle highs should occur for HUI/XAU such that their Cyclical Bear Market (began 5-11-06) downtrend lines begin relatively flat, as NEM's did after it peaked on 1-31-06.
The XAU has upside gaps at 139.83 from 6-6 and at 159.41 from 5-15, and, NEM has upside gaps at 52.58 from 6-5 and at 56.31 from 5-15 that will probably get filled in the next few weeks, though the XAU's upside gap at 159.41 from 5-15 and NEM's upside gap at 56.31 from 5-15 may be breakaway gaps to the downside that won't get filled until the Wave 3 Cyclical Bull Market. Today's downside gaps created at the open at 122.71 for the XAU and at 48.59 for NEM are probably short term breakaway gaps that won't get filled until after monthly cycle highs occur in the next few weeks. They appear to be breakaway gaps because they're much larger than gaps normally are.
It's pretty obvious that long term cycle highs did occur on 5-11-06 for HUI at 401.69 and at 171.71 for the XAU, and, at 62.72 on 1-31-06 for reliable lead indicator NEM, for the long term upcycle that began on 5-10-04. "Trade the Cycles" worked well as usual. Those cycle highs are probably also Cyclical Bull Market cycle highs for the Wave 1 Cyclical Bull Market that began in late 2000 for HUI/NEM/XAU, which means that an 18-24 month Cyclical Bear Market is probably in effect for HUI/NEM/XAU, that corresponds to Wave 2 down of the Secular Bull Market/very long term upcycle that began in late 2000. Since many gold/silver stocks' cycles lag or are out of sync with HUI/NEM/XAU there are still a lot of good investing and trading opportunities in the sector. See charts at: http://www.joefrocks.com/GoldStockCharts.html with chart 8 being the very important very long term chart done in February.
Tuesday 6-13 was probably the bottom for this ABC downcycle (probably Wave A down of the Wave 2 Cyclical Bear Market's Wave A down), that is also probably the start of an 18-24 month Cyclical Bear Market, so it wasn't really a correction because it's probably the start of an 18-24 month downtrend/Wave 2 Cyclical Bear Market for HUI/XAU. For recent action see http://finance.yahoo.com/q/ta?t=5d&l=off&z=m&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=&s=%5Exau. ....... http://www.JoeFRocks.com/
Notice how closely the XAU tracked SPX (S & P 500) recently: http://finance.yahoo.com/q/ta?t=5d&s=%5EXAU&l=off&z=m&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=&c=%5EGSPC.
The NEM Lead Indicator was a bearish -0.37% vs the XAU yesterday, was a very bullish +2.06% vs the XAU on 6-13 and was a very bullish +1.29% on 6-12. The NEM Lead Indicator was a very bullish +3.54% vs the XAU last week. So, a substantial rebound is likely over the next few weeks, and, cycle highs should occur for HUI/XAU such that their Cyclical Bear Market (began 5-11-06) downtrend lines begin relatively flat, as NEM's did after it peaked on 1-31-06.
The XAU has upside gaps at 139.83 from 6-6 and at 159.41 from 5-15, and, NEM has upside gaps at 52.58 from 6-5 and at 56.31 from 5-15 that will probably get filled in the next few weeks, though the XAU's upside gap at 159.41 from 5-15 and NEM's upside gap at 56.31 from 5-15 may be breakaway gaps to the downside that won't get filled until the Wave 3 Cyclical Bull Market. Today's downside gaps created at the open at 122.71 for the XAU and at 48.59 for NEM are probably short term breakaway gaps that won't get filled until after monthly cycle highs occur in the next few weeks. They appear to be breakaway gaps because they're much larger than gaps normally are.
It's pretty obvious that long term cycle highs did occur on 5-11-06 for HUI at 401.69 and at 171.71 for the XAU, and, at 62.72 on 1-31-06 for reliable lead indicator NEM, for the long term upcycle that began on 5-10-04. "Trade the Cycles" worked well as usual. Those cycle highs are probably also Cyclical Bull Market cycle highs for the Wave 1 Cyclical Bull Market that began in late 2000 for HUI/NEM/XAU, which means that an 18-24 month Cyclical Bear Market is probably in effect for HUI/NEM/XAU, that corresponds to Wave 2 down of the Secular Bull Market/very long term upcycle that began in late 2000. Since many gold/silver stocks' cycles lag or are out of sync with HUI/NEM/XAU there are still a lot of good investing and trading opportunities in the sector. See charts at: http://www.joefrocks.com/GoldStockCharts.html with chart 8 being the very important very long term chart done in February.
Tuesday 6-13 was probably the bottom for this ABC downcycle (probably Wave A down of the Wave 2 Cyclical Bear Market's Wave A down), that is also probably the start of an 18-24 month Cyclical Bear Market, so it wasn't really a correction because it's probably the start of an 18-24 month downtrend/Wave 2 Cyclical Bear Market for HUI/XAU. For recent action see http://finance.yahoo.com/q/ta?t=5d&l=off&z=m&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=&s=%5Exau. ....... http://www.JoeFRocks.com/
posted by Joe Ferrazzano at
7:02 AM
