The NEM Lead Indicator Was A Bearish -0.61% Vs The XAU Today
The NEM Lead Indicator was a bearish -0.61% vs the XAU today, which reinforces my belief that monthly cycle highs occurred yesterday for HUI/XAU and last Wednesday for reliable lead indicator NEM. Tomorrow NEM may finally fill it's downside gap at 45.27 from last Wednesday 11-1, when the big potentially important breakaway gap to 46.25 occurred at the open. One should wait for that downside gap at 45.27 to get filled before turning bearish, but, given that NEM now has a four session downtrend, it's very likely to have hit a monthly cycle high last Wednesday at 46.89.
There are two potential scenarios right now. The very 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, points to another vicious 3-6 weekish 30-35%+ decline for HUI/XAU, that would probably mark the end of the Wave 2 Cyclical Bear Market since 5-11-06. The very bearish one year NEM Lead Indicator is similar to the way it was in May and early September when vicious declines began. What's interesting is that reliable lead indicator NEM probably hit a very important Wave 2 Cyclical Bear Market (began 1-31-06) cycle low at 39.84 on 10-4-06, so, NEM should only decline 10-15% while HUI/XAU drop 30-35%+. The other scenario is the 2 weekish monthly downcycle scenario where HUI/XAU drop 8-15%. If the vicious decline scenario occurs short term there should soon be some big down days of 3-5%+. It should make itself obvious.
With my "Trade the Cycles" system I wait for HUI/NEM/XAU to fall in excess of 5% in the 2-4 session Wave A short term downcycle before looking to short/buy puts during Wave B up, so, I wouldn't have gotten faked out by the recent action anyway, but, since NEM is such a good lead indicator for gold/silver stocks and had a large potentially important breakaway gap to the upside on Wednesday 11-1 (XAU's was a breakaway candidate but not as good/large as NEM's), I would have waited for NEM to fill it's downside gap at 45.27 before looking to short/buy puts.
So, one must wait for reliable lead indicator NEM to fill it's downside gap at 45.27 to confirm that NEM didn't experience a major breakout, and, with my "Trade the Cycles" system I wait for HUI/NEM/XAU to fall in excess of 5% in the 2-4 session Wave A short term downcycle before looking to short/buy puts during Wave B up anyway.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 3 and 5 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 4 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
There are two potential scenarios right now. The very 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, points to another vicious 3-6 weekish 30-35%+ decline for HUI/XAU, that would probably mark the end of the Wave 2 Cyclical Bear Market since 5-11-06. The very bearish one year NEM Lead Indicator is similar to the way it was in May and early September when vicious declines began. What's interesting is that reliable lead indicator NEM probably hit a very important Wave 2 Cyclical Bear Market (began 1-31-06) cycle low at 39.84 on 10-4-06, so, NEM should only decline 10-15% while HUI/XAU drop 30-35%+. The other scenario is the 2 weekish monthly downcycle scenario where HUI/XAU drop 8-15%. If the vicious decline scenario occurs short term there should soon be some big down days of 3-5%+. It should make itself obvious.
With my "Trade the Cycles" system I wait for HUI/NEM/XAU to fall in excess of 5% in the 2-4 session Wave A short term downcycle before looking to short/buy puts during Wave B up, so, I wouldn't have gotten faked out by the recent action anyway, but, since NEM is such a good lead indicator for gold/silver stocks and had a large potentially important breakaway gap to the upside on Wednesday 11-1 (XAU's was a breakaway candidate but not as good/large as NEM's), I would have waited for NEM to fill it's downside gap at 45.27 before looking to short/buy puts.
So, one must wait for reliable lead indicator NEM to fill it's downside gap at 45.27 to confirm that NEM didn't experience a major breakout, and, with my "Trade the Cycles" system I wait for HUI/NEM/XAU to fall in excess of 5% in the 2-4 session Wave A short term downcycle before looking to short/buy puts during Wave B up anyway.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 3 and 5 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 4 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
posted by Joe Ferrazzano at
3:49 PM
