...........The Critical Chart - HUI's One Year Chart
A picture really is worth a thousand words. "Trade the Cycles" is based on cycle trendlines/channels used in concert with Elliot Wave patterns and gaps, in other words pictures. In HUI's one year chart, see http://www.joefrocks.com/GoldStockCharts.html, one can see that, in it's monthly upcycle since 10-4-06, HUI has rallied toward it's Wave 2 Cyclical Bear Market downtrend line in effect since 5-11-06. HUI has been in Wave B up of Wave C down (of the Wave 2 Cyclical Bear Market) since 10-4-06.
In chart three (http://www.joefrocks.com/GoldStockCharts.html) one can see that, even if HUI's Secular Bull Market/very long term upcycle trendline (in effect since November 2000) turns up, HUI should still fall to 220ish. HUI closed yesterday at 340.26, so, HUI is likely to fall AT LEAST 35% in the next 3-6 weeks. Buying gold/silver stocks right now is probably "suicide."
The fact that HUI/XAU have well established multi-month Wave 2 Cyclical Bear Market downtrends, and, remain so far above their Secular Bull Market/very long term upcycle trendlines, is why one MUST be bearish/very cautious right now, and, why the vast majority of gold writers, who are generally very bullish/complacent right now, itself a very bearish sign (they're a great contrarian indicator viewed as a group), are ALL WET.
HUI and the XAU modestly exceeded (on Friday 11-24) the cycle highs that occurred on 11-9-06 that appeared to be monthly cycle highs. In order for "Trade the Cycles" to turn bullish HUI/XAU would have to break the Wave 2 Cyclical Bear Market declining peaks downtrend lines since 5-11-06, AND, they would have to follow through by 5%+ in order to flash a major buy signal.
Given an extremely bearish one year NEM Lead Indicator (see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem) and a very bearish short term NEM Lead Indicator (see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem) as well as the very bearish COT (Commitments Of Traders) data in recent weeks (see three paragraphs below), the big spike/short term upcycle since early Friday 11-17 (see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==) is probably important spiking/peaking action.
A vicious 3-6 week 30-40% decline is likely that will probably see HUI/XAU fall to their Secular Bull Market/very long term upcycle trendlines in place since November (HUI)/October (XAU) 2000 (conclude their Wave 2 Cyclical Bear Market that began 5-11-06).
The NEM Lead Indicator was a bearish -0.84% versus the XAU on 11-24, was a very bearish -1.03% on 11-22, and, was a very bearish -1.30% on 11-21. So, the very large spike move since early Friday 11-17 was probably the last gasp of the monthly upcycle since 10-4-06. It's peaking in dramatic rollover/flattening out mode.
HUI's very flat action that occurred for a few hours on Friday after the large spike at the open (see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==) is a sign that an important cycle high may have occurred on Friday.
The COT (Commitments Of Traders) data (five day period ending 11-14) again jives with the vicious decline scenario, since the non contrarian gold Commercial Traders traded significantly net short, while the contrarian/clueless gold Speculators traded significantly net long, see http://www.cftc.gov/dea/options/deacmxsof.htm. The non contrarian gold Commercial Traders aggressively shorted gold again, adding 18,336 short futures and options contracts after adding 25,249 short futures and options contracts the week before, while also correctly anticipating that there would be some significant strength, because they added 8,943 long futures and options contracts.
HUI/NEM/XAU should be about to fall off a cliff the next few sessions, which will be the start of Wave A down of the likely 3-6 weekish vicious decline for HUI/XAU. Since 10-4-06 HUI/XAU have rallied toward their Wave 2 Cyclical Bear Market (began 5-11-06) downtrend lines, and, may have entered Wave C of Wave C (Wave C is probably doing an Elliot Wave ABC down up down pattern), in which HUI/XAU may experience a vicious 3-6 weekish 30-40% decline that should mark the end of their Wave 2 Cyclical Bear Market (began 5-11-06). They should decline to or at least approach their Secular Bull Market/very long term upcycle trendlines at 200ish for HUI (the trendline could turn up to 220ish since HUI is more parabolic/volatile than the XAU) and at 90ish for the XAU, see charts 2 and 4 at http://www.joefrocks.com/GoldStockCharts.html.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 2 and 4 at http://www.joefrocks.com/GoldStockCharts.html. NEM's Wave 2 Cyclical Bear Market that began on 1-31-06 ended on 10-4-06 at 39.84, so, reliable lead indicator NEM is probably in a 5 yearish Wave 3 Cyclical Bull Market since 10-4-06, see chart 3 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
In chart three (http://www.joefrocks.com/GoldStockCharts.html) one can see that, even if HUI's Secular Bull Market/very long term upcycle trendline (in effect since November 2000) turns up, HUI should still fall to 220ish. HUI closed yesterday at 340.26, so, HUI is likely to fall AT LEAST 35% in the next 3-6 weeks. Buying gold/silver stocks right now is probably "suicide."
The fact that HUI/XAU have well established multi-month Wave 2 Cyclical Bear Market downtrends, and, remain so far above their Secular Bull Market/very long term upcycle trendlines, is why one MUST be bearish/very cautious right now, and, why the vast majority of gold writers, who are generally very bullish/complacent right now, itself a very bearish sign (they're a great contrarian indicator viewed as a group), are ALL WET.
HUI and the XAU modestly exceeded (on Friday 11-24) the cycle highs that occurred on 11-9-06 that appeared to be monthly cycle highs. In order for "Trade the Cycles" to turn bullish HUI/XAU would have to break the Wave 2 Cyclical Bear Market declining peaks downtrend lines since 5-11-06, AND, they would have to follow through by 5%+ in order to flash a major buy signal.
Given an extremely bearish one year NEM Lead Indicator (see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem) and a very bearish short term NEM Lead Indicator (see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem) as well as the very bearish COT (Commitments Of Traders) data in recent weeks (see three paragraphs below), the big spike/short term upcycle since early Friday 11-17 (see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==) is probably important spiking/peaking action.
A vicious 3-6 week 30-40% decline is likely that will probably see HUI/XAU fall to their Secular Bull Market/very long term upcycle trendlines in place since November (HUI)/October (XAU) 2000 (conclude their Wave 2 Cyclical Bear Market that began 5-11-06).
The NEM Lead Indicator was a bearish -0.84% versus the XAU on 11-24, was a very bearish -1.03% on 11-22, and, was a very bearish -1.30% on 11-21. So, the very large spike move since early Friday 11-17 was probably the last gasp of the monthly upcycle since 10-4-06. It's peaking in dramatic rollover/flattening out mode.
HUI's very flat action that occurred for a few hours on Friday after the large spike at the open (see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==) is a sign that an important cycle high may have occurred on Friday.
The COT (Commitments Of Traders) data (five day period ending 11-14) again jives with the vicious decline scenario, since the non contrarian gold Commercial Traders traded significantly net short, while the contrarian/clueless gold Speculators traded significantly net long, see http://www.cftc.gov/dea/options/deacmxsof.htm. The non contrarian gold Commercial Traders aggressively shorted gold again, adding 18,336 short futures and options contracts after adding 25,249 short futures and options contracts the week before, while also correctly anticipating that there would be some significant strength, because they added 8,943 long futures and options contracts.
HUI/NEM/XAU should be about to fall off a cliff the next few sessions, which will be the start of Wave A down of the likely 3-6 weekish vicious decline for HUI/XAU. Since 10-4-06 HUI/XAU have rallied toward their Wave 2 Cyclical Bear Market (began 5-11-06) downtrend lines, and, may have entered Wave C of Wave C (Wave C is probably doing an Elliot Wave ABC down up down pattern), in which HUI/XAU may experience a vicious 3-6 weekish 30-40% decline that should mark the end of their Wave 2 Cyclical Bear Market (began 5-11-06). They should decline to or at least approach their Secular Bull Market/very long term upcycle trendlines at 200ish for HUI (the trendline could turn up to 220ish since HUI is more parabolic/volatile than the XAU) and at 90ish for the XAU, see charts 2 and 4 at http://www.joefrocks.com/GoldStockCharts.html.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 2 and 4 at http://www.joefrocks.com/GoldStockCharts.html. NEM's Wave 2 Cyclical Bear Market that began on 1-31-06 ended on 10-4-06 at 39.84, so, reliable lead indicator NEM is probably in a 5 yearish Wave 3 Cyclical Bull Market since 10-4-06, see chart 3 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, XAU
posted by Joe Ferrazzano at
12:29 PM
