........................Potential Headfake Rally
In the latest COT report (http://www.cftc.gov/dea/options/deacmxsof.htm) the non contrarian gold Commercial Traders traded significantly net long while the contrarian speculators traded significantly net short, which points to the potential for a headfake rally in the near future. SPX strength last week also points to a potential near term headfake rally due to index fund buying.
After a potential near term headfake rally, I see the XAU experiencing a dramatic decline to 100-110 in the next few weeks, which should be Wave A down of the 18 monthish Wave 2 Cyclical Bear Market (since 5-11-06 for HUI/XAU and since 1-31-06 for reliable lead indicator NEM) bottoming.
The previous monthly upcycle was a muted/anemic one in terms of the gains seen in HUI/NEM/XAU. The latest monthly cycle highs on 8-9 failed to exceed the previous monthly cycle highs on 7-12, despite starting the monthly upcycle at a substantially higher level, which is obviously a major negative short term. The last week of HUI's monthly upcycle was nearly perfectly flat, with a double top monthly cycle high on 8-9 at 348.84 vs 348.74 on 8-2. If there is a headfake rally near term it's likely to be even more anemic than the latest monthly upcycle from 7-24 until 8-9 (for HUI/NEM/XAU).
For recent action see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=b&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. ....... http://www.JoeFRocks.com/
After a potential near term headfake rally, I see the XAU experiencing a dramatic decline to 100-110 in the next few weeks, which should be Wave A down of the 18 monthish Wave 2 Cyclical Bear Market (since 5-11-06 for HUI/XAU and since 1-31-06 for reliable lead indicator NEM) bottoming.
The previous monthly upcycle was a muted/anemic one in terms of the gains seen in HUI/NEM/XAU. The latest monthly cycle highs on 8-9 failed to exceed the previous monthly cycle highs on 7-12, despite starting the monthly upcycle at a substantially higher level, which is obviously a major negative short term. The last week of HUI's monthly upcycle was nearly perfectly flat, with a double top monthly cycle high on 8-9 at 348.84 vs 348.74 on 8-2. If there is a headfake rally near term it's likely to be even more anemic than the latest monthly upcycle from 7-24 until 8-9 (for HUI/NEM/XAU).
For recent action see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=b&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. ....... http://www.JoeFRocks.com/
posted by Joe Ferrazzano at
12:02 PM
