The NEM Lead Indicator Turned Slightly Bullish On Friday
The NEM Lead Indicator turned slightly bullish on Friday, at +0.07% versus the XAU, and, for the week was a bearish -1.62% versus the XAU (-2.01% vs -2.08% on 10-20, +2.65% vs +3.54% on 10-19, -2.38% vs -1.89% on 10-18, -0.76% vs -0.61% on 10-17, +0.79% vs +0.95% on 10-16). The NEM Lead Indicator turning a very bearish -0.89% versus the XAU on Thursday was a sign to look to sell, and, HUI/XAU hit a Wave 3 short term cycle high just after the open on Friday, versus NEM doing so last Monday at 43.75.
As previously discussed NEM is likely to fill it's downside gaps at 42.21 and 41.83, and, the XAU is likely to fill it's downside gap at 126.88 (127.01?), but, it's downside gap at 125.39 from 10-13-06 probably won't get filled, because it's a likely breakaway gap and because 125.39 is below the bottom of the monthly upcycle channel, see the first chart at http://www.joefrocks.com/GoldStockCharts.html. HUI/XAU began the Wave 4 short term downcycle on Friday (shortly after the open), for the monthly upcycle since 10-4-06. Reliable lead indicator NEM began the Wave 4 short term downcycle last Monday at 43.75, then did a Wave A down to 42.09 on Wednesday, followed by a Wave B up to 43.65 on Friday, and, should complete Wave C down on Monday, probably filling it's downside gaps at 42.21 and 41.83.
So, once the XAU fills it's downside gap at 126.88, and, if the NEM Lead Indicator is bullish, hopefully > +0.50% versus the XAU at the time, then looking to buy probably makes sense, but, one must gauge the cycles of the gold/silver stocks one's trading, using cycle channels/trendlines, Elliot Wave, gaps, technical indicators, volume, etc.
The COT (Commitments Of Traders) data (http://www.cftc.gov/dea/options/deacmxsof.htm) jives with the monthly upcycle since 10-4-06 remaining in effect for another week or more. The week before last's COT data was clearly intermediate (weeks/months) term bullish, with the gold Commercial Traders trading substantially net long, with a net long trade of greater than 10,000 futures and options contracts, including an increase in their long position of > 15,000 futures and options contracts. Last week they traded significantly net short, but, most of the trade was long liquidation (they sold 3,726 long futures and options contracts), they only added a very modest 714 short futures and options contracts. So, the COT data jives with a Wave 5 short term upcycle occurring this week for HUI/NEM/XAU, once Wave 4 bottoms (probably on Monday), and, there may be another short term upcycle after that as the monthly upcycle since 10-4-06 rolls over.
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 (ended at 39.84 on Wednesday 10-4). NEM's Secular Bull Market/very long term upcycle trendline is currently at 40ish (see third 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
As previously discussed NEM is likely to fill it's downside gaps at 42.21 and 41.83, and, the XAU is likely to fill it's downside gap at 126.88 (127.01?), but, it's downside gap at 125.39 from 10-13-06 probably won't get filled, because it's a likely breakaway gap and because 125.39 is below the bottom of the monthly upcycle channel, see the first chart at http://www.joefrocks.com/GoldStockCharts.html. HUI/XAU began the Wave 4 short term downcycle on Friday (shortly after the open), for the monthly upcycle since 10-4-06. Reliable lead indicator NEM began the Wave 4 short term downcycle last Monday at 43.75, then did a Wave A down to 42.09 on Wednesday, followed by a Wave B up to 43.65 on Friday, and, should complete Wave C down on Monday, probably filling it's downside gaps at 42.21 and 41.83.
So, once the XAU fills it's downside gap at 126.88, and, if the NEM Lead Indicator is bullish, hopefully > +0.50% versus the XAU at the time, then looking to buy probably makes sense, but, one must gauge the cycles of the gold/silver stocks one's trading, using cycle channels/trendlines, Elliot Wave, gaps, technical indicators, volume, etc.
The COT (Commitments Of Traders) data (http://www.cftc.gov/dea/options/deacmxsof.htm) jives with the monthly upcycle since 10-4-06 remaining in effect for another week or more. The week before last's COT data was clearly intermediate (weeks/months) term bullish, with the gold Commercial Traders trading substantially net long, with a net long trade of greater than 10,000 futures and options contracts, including an increase in their long position of > 15,000 futures and options contracts. Last week they traded significantly net short, but, most of the trade was long liquidation (they sold 3,726 long futures and options contracts), they only added a very modest 714 short futures and options contracts. So, the COT data jives with a Wave 5 short term upcycle occurring this week for HUI/NEM/XAU, once Wave 4 bottoms (probably on Monday), and, there may be another short term upcycle after that as the monthly upcycle since 10-4-06 rolls over.
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 (ended at 39.84 on Wednesday 10-4). NEM's Secular Bull Market/very long term upcycle trendline is currently at 40ish (see third 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
12:14 PM
