XAU's Downside Gap At 144.96 From Yesterday Filled
The XAU is seriously testing Tuesday's "likely" short term cycle low right now and the XAU's downside gap proved to not be a breakaway gap, which is a bearish sign short term (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=). The XAU just hit 144.35 versus Tuesday's cycle low at 144.30, which might end up being a near perfect double bottom, which would be a plus in a Bull Market, but probably not (right now at least) in this Wave 2 Cyclical Bear Market that began on 5-11-06.
Given the Wave 2 Cyclical Bear Market that began on 5-11-06 for HUI/XAU (1-31-06 for reliable lead indicator NEM) and that Wave A down is probably in effect, buy signals like yesterday's 1% short term cycle buy signal for HUI/NEM/XAU won't work as well as they do in a Cyclical Bull Market. So far, amazingly, HUI and the XAU's "likely" short term cycle lows that occurred late on Tuesday have (barely) held.
I now have serious doubts about trading long short term and probably won't, at least not right now. Since HUI/XAU are probably in Wave A down of an 18 monthish Wave 2 Cyclical Bear Market that began on 5-11-06 the surprises will tend to be to the downside/risk is high right now. HUI is below where it traded six sessions ago and technical indicators like RSI and Williams %R have turned sharply lower.
The XAU Put/Call Ratio's recent collapse to a complacent 0.68080 today (August expiration), the negative NEM Lead Indicator at -0.04% versus the XAU so far this week, at -0.86% versus the XAU last week, and at -4.31% the week before, and the aggressive long liquidation by the gold Commercial Traders in the five sessions ending 8-1-06, see http://www.cftc.gov/dea/options/deacmxsof.htm, are major warning signs, which jives with my expectation that after this minor intermediate term upcycle since 6-13 peaks I expect lower lows to occur than those that occurred on 6-13, because reliable lead indicator NEM began an 18 monthish Wave 2 Cyclical Bear Market on 1-31-06 and HUI/XAU did so on 5-11-06, and, I'm looking for Wave C down of the Cyclical Bear Market's Wave A down after this minor intermediate term upcycle since 6-13 peaks. The XAU may attempt to fill it's upside gap at 159.41 from 5-15 short term, then look out and batten the hatches.
Given/assuming that NEM began an 18 monthish Wave 2 Cyclical Bear Market on 1-31-06 and HUI/XAU did so on 5-11-06 one should be more cautious now about trading long. The risky Monthly Upcycle began early on Monday 7-24 and a 2% buy signal occurred on Tuesday 7-25. ....... http://www.JoeFRocks.com/
Given the Wave 2 Cyclical Bear Market that began on 5-11-06 for HUI/XAU (1-31-06 for reliable lead indicator NEM) and that Wave A down is probably in effect, buy signals like yesterday's 1% short term cycle buy signal for HUI/NEM/XAU won't work as well as they do in a Cyclical Bull Market. So far, amazingly, HUI and the XAU's "likely" short term cycle lows that occurred late on Tuesday have (barely) held.
I now have serious doubts about trading long short term and probably won't, at least not right now. Since HUI/XAU are probably in Wave A down of an 18 monthish Wave 2 Cyclical Bear Market that began on 5-11-06 the surprises will tend to be to the downside/risk is high right now. HUI is below where it traded six sessions ago and technical indicators like RSI and Williams %R have turned sharply lower.
The XAU Put/Call Ratio's recent collapse to a complacent 0.68080 today (August expiration), the negative NEM Lead Indicator at -0.04% versus the XAU so far this week, at -0.86% versus the XAU last week, and at -4.31% the week before, and the aggressive long liquidation by the gold Commercial Traders in the five sessions ending 8-1-06, see http://www.cftc.gov/dea/options/deacmxsof.htm, are major warning signs, which jives with my expectation that after this minor intermediate term upcycle since 6-13 peaks I expect lower lows to occur than those that occurred on 6-13, because reliable lead indicator NEM began an 18 monthish Wave 2 Cyclical Bear Market on 1-31-06 and HUI/XAU did so on 5-11-06, and, I'm looking for Wave C down of the Cyclical Bear Market's Wave A down after this minor intermediate term upcycle since 6-13 peaks. The XAU may attempt to fill it's upside gap at 159.41 from 5-15 short term, then look out and batten the hatches.
Given/assuming that NEM began an 18 monthish Wave 2 Cyclical Bear Market on 1-31-06 and HUI/XAU did so on 5-11-06 one should be more cautious now about trading long. The risky Monthly Upcycle began early on Monday 7-24 and a 2% buy signal occurred on Tuesday 7-25. ....... http://www.JoeFRocks.com/
posted by Joe Ferrazzano at
8:45 AM
