.......A Deceiving Brief/20 Minute Early Spike
After a sharp 20 minute early spike HUI/NEM/XAU are plunging now. NEM and the XAU have downside gaps at today's open that must be watched at 42.21 and at 126.88 (might be 127.01), and, if those gaps get filled the downside gaps from last Friday at 41.83 and at 125.39 must be watched. It would be easy to draw the conclusion that the Wave 5 short term upcycle of the monthly upcycle since 10-4-06 has begun, and, it might have, but, one must watch the downside gaps and wait right now.
Right now there are many negatives such as the very brief 20 minute follow through (one should rarely chase a sharp spike), yesterday's bearish NEM Lead Indicator at -0.49% versus the XAU, and, both XAU Implied Volatility (fell to 40.825 yesterday from 41.435 on Tuesday despite a significant decline in the XAU) and the XAU Put/Call Ratio (fell to 0.61789 today from 0.63593 yesterday, October expiration) portend weakness today. So, three indicators portend weakness today following that very brief spike. In other words, today's tone is likely to be weakness/a downtrend after the very brief early spike.
A major positive today is that the Fed spiked the index fund trader punch in a big way, as they usually do on Thursday, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE,
with nearly $18 Billion in Repos, which is well above average even for a Thursday. One has to make sure that the downside gap filling action has been completed or won't occur before this becomes important.
The NEM Lead Indicator is a modestly bearish -0.40% right now, so, it looks like NEM may fill today's downside gap at 42.21, and, last Friday's downside gap at 41.83 might also get filled. The same is true of the XAU's downside gaps at 127.01 and at 125.39.
The XAU and HUI have been in a Wave 2 Cyclical Bear Market since 5-11-06 (but began the bullish 3-6 month Wave B up on 10-4-06) and reliable lead indicator NEM was (until 10-4-06) in a Wave 2 Cyclical Bear Market since 1-31-06 (probably ended at 39.84 on Wednesday 10-4). NEM's Secular Bull Market/very long term upcycle trendline is currently at 40ish (see second chart at http://www.joefrocks.com/GoldStockCharts.html). 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/
HUI NEM XAU
Right now there are many negatives such as the very brief 20 minute follow through (one should rarely chase a sharp spike), yesterday's bearish NEM Lead Indicator at -0.49% versus the XAU, and, both XAU Implied Volatility (fell to 40.825 yesterday from 41.435 on Tuesday despite a significant decline in the XAU) and the XAU Put/Call Ratio (fell to 0.61789 today from 0.63593 yesterday, October expiration) portend weakness today. So, three indicators portend weakness today following that very brief spike. In other words, today's tone is likely to be weakness/a downtrend after the very brief early spike.
A major positive today is that the Fed spiked the index fund trader punch in a big way, as they usually do on Thursday, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE,
with nearly $18 Billion in Repos, which is well above average even for a Thursday. One has to make sure that the downside gap filling action has been completed or won't occur before this becomes important.
The NEM Lead Indicator is a modestly bearish -0.40% right now, so, it looks like NEM may fill today's downside gap at 42.21, and, last Friday's downside gap at 41.83 might also get filled. The same is true of the XAU's downside gaps at 127.01 and at 125.39.
The XAU and HUI have been in a Wave 2 Cyclical Bear Market since 5-11-06 (but began the bullish 3-6 month Wave B up on 10-4-06) and reliable lead indicator NEM was (until 10-4-06) in a Wave 2 Cyclical Bear Market since 1-31-06 (probably ended at 39.84 on Wednesday 10-4). NEM's Secular Bull Market/very long term upcycle trendline is currently at 40ish (see second chart at http://www.joefrocks.com/GoldStockCharts.html). 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/
HUI NEM XAU
posted by Joe Ferrazzano at
7:29 AM
