Friday's Downside Gaps At 41.83 For NEM And At 125.39 For The XAU Appear To Be Breakaway Gaps
Today's action suggests that Friday's downside gaps at 41.83 for NEM and at 125.39 for the XAU are breakaway gaps that won't get filled short term. The problem is that the COT data (as discussed previously) is short term bearish and HUI/NEM/XAU are very overbought short term, with William's %R at -7.33 for HUI, at -3.37 for NEM, and at -8.71 for the XAU. Above -20 is overbought and near 0 is extremely overbought, so, HUI/NEM/XAU are very overbought short term.
Also, the XAU's Wave 3 short term upcycle that began early last Thursday (HUI/NEM's began on Tuesday 10-10) is rolling over/flattening out, see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. But, if Friday's downside gaps at 41.83 for NEM and at 125.39 for the XAU are breakaway gaps, then this should be a big Wave 3 and significant weakness should be a good buying opportunity. The situation is as I expected over the weekend. Additional upside on Monday/early this week followed by a significant pullback.
The NEM Lead Indicator was only slightly bearish at -0.16% versus the XAU today, which means more upside tomorow won't be surprising. There's a good chance that Friday's downside gaps (at 41.83 for NEM and at 125.39 for the XAU) are breakaway gaps and won't get filled short term, because Friday's upside gap filling action by HUI/NEM/XAU, which filled their large upside gaps from 10-3's huge decline, was a major buy signal/breakout.
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
Also, the XAU's Wave 3 short term upcycle that began early last Thursday (HUI/NEM's began on Tuesday 10-10) is rolling over/flattening out, see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. But, if Friday's downside gaps at 41.83 for NEM and at 125.39 for the XAU are breakaway gaps, then this should be a big Wave 3 and significant weakness should be a good buying opportunity. The situation is as I expected over the weekend. Additional upside on Monday/early this week followed by a significant pullback.
The NEM Lead Indicator was only slightly bearish at -0.16% versus the XAU today, which means more upside tomorow won't be surprising. There's a good chance that Friday's downside gaps (at 41.83 for NEM and at 125.39 for the XAU) are breakaway gaps and won't get filled short term, because Friday's upside gap filling action by HUI/NEM/XAU, which filled their large upside gaps from 10-3's huge decline, was a major buy signal/breakout.
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
2:43 PM
