Trade the Cycles

Wednesday, November 08, 2006

NEM's Downside Gap At 45.27 From 11-1 Got Filled

NEM's downside gap at 45.27 from 11-1 finally got filled today, confirming that the large gap up from 45.27 to 46.25 on 11-1 wasn't an important breakaway gap, but, instead was spiking/peaking action, which means that monthly cycle highs probably occurred on Monday for HUI/XAU and on 11-1 for reliable lead indicator NEM, for the monthly upcycle that began on 10-4-06. The NEM Lead Indicator was a bearish -0.61% vs the XAU yesterday, which reinforces my belief that the monthly cycle highs are in.

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.

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/ .