Reliable Lead Indicator NEM Appears To Be In The Wave 4 Short Term Downcycle
Reliable lead indicator NEM appears to be in the Wave 4 short term downcycle (since Monday's Wave 3 short term cycle high at 43.75) as expected, and, as expected, is probably in Wave C of the Wave 4 short term downcycle since today's very early Wave B cycle high at 43.65.
NEM and the XAU have downside gaps created at yesterday's open that must be watched at 42.21 and at 126.88, and, if those gaps get filled (likely), the downside gaps from Friday 10-13-06 at 41.83 and at 125.39 must be watched. It looks like NEM will fill it's downside gaps at 42.21 and at 41.83, and, the XAU may fill both of it's downside gaps at 126.88 and at 125.39, but, the downside gap at 125.39 probably won't get filled. The XAU's monthly upcycle (since 10-4-06) channel bottom is at 125.50 at yesterday's close, see the first chart at http://www.joefrocks.com/GoldStockCharts.html, which suggests that the XAU's downside gap at 125.39 from 10-13-06 won't get filled next week.
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. Last week'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. This 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 next 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.
I did the XAU's one month chart that has the monthly upcycle channel, with annotations, see the first chart at http://www.joefrocks.com/GoldStockCharts.html. HUI/XAU began the Wave 4 short term downcycle today (shortly after the open), for the monthly upcycle since 10-4-06.
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
NEM and the XAU have downside gaps created at yesterday's open that must be watched at 42.21 and at 126.88, and, if those gaps get filled (likely), the downside gaps from Friday 10-13-06 at 41.83 and at 125.39 must be watched. It looks like NEM will fill it's downside gaps at 42.21 and at 41.83, and, the XAU may fill both of it's downside gaps at 126.88 and at 125.39, but, the downside gap at 125.39 probably won't get filled. The XAU's monthly upcycle (since 10-4-06) channel bottom is at 125.50 at yesterday's close, see the first chart at http://www.joefrocks.com/GoldStockCharts.html, which suggests that the XAU's downside gap at 125.39 from 10-13-06 won't get filled next week.
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. Last week'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. This 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 next 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.
I did the XAU's one month chart that has the monthly upcycle channel, with annotations, see the first chart at http://www.joefrocks.com/GoldStockCharts.html. HUI/XAU began the Wave 4 short term downcycle today (shortly after the open), for the monthly upcycle since 10-4-06.
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
1:24 PM
