...............Crucial S & P 500 (SPX) Analysis
As discussed previously the S & P 500 (SPX) will probably drive the vicious 30-45% decline in HUI/XAU over the next 3-6 weeks, because it drives the action in most sector indices due to programmed index fund trading. SPX was a huge/major factor behind HUI/XAU's two vicious declines this year, from May 11 until June 13 and from early September until October 4.
Note in SPX's six month chart (see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=6m&l=off&z=l&q=b&p=&a=m26-12-9,p12,fs,w14&c= today's bar doesn't appear until tomorrow) that in November it's minor intermediate term upcycle since mid June flattened out some/rolled over (in the third Wave 5 monthly upcycle), and, SPX appears to have put in a minor intermediate term cycle high on 11-22-06, that was tested yesterday when a slightly lower bearish Wave B double top occurred. This means that SPX is now doing a short term Wave C down that points to more HUI/NEM/XAU weakness on Monday, and, probably means that HUI/NEM/XAU put in a minor intermediate term cycle high today, lagging SPX by over a week.
SPX's technical indicators have deteriorated dramatically. RSI, Stochastics, MACD, and Williams %R have all trended down since late October, which is a very bearish divergence with SPX/price, which probably peaked on 11-22-06.
Assuming that SPX hit a minor intermediate term cycle high on 11-22-06, then HUI/XAU are almost certainly on the verge of the vicious 30-45% decline that their cycles indicate should occur. In the Wave 2 Cyclical Bear Market HUI/XAU should hit/approach their primary Secular Bull Market/very long term upcycle trendlines (see charts 3 and 5 at http://www.joefrocks.com/GoldStockCharts.html), just as reliable lead indicator NEM did on 10-4-06 (see chart 4 at the link above), with a likely Wave 2 Cyclical Bear Market cycle low at 39.84.
There are many other reasons to expect a vicious decline, such as the 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), the very bearish COT data (see http://www.cftc.gov/dea/options/deacmxsof.htm, there was massive long liquidation by the gold Commercial Traders, who were also short squeezed in a big way), deteriorating technical indicators, etc.
HUI/NEM/XAU should be about to fall off a cliff the next few sessions, which will be 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 3 and 5 at http://www.joefrocks.com/GoldStockCharts.html.
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
Note in SPX's six month chart (see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=6m&l=off&z=l&q=b&p=&a=m26-12-9,p12,fs,w14&c= today's bar doesn't appear until tomorrow) that in November it's minor intermediate term upcycle since mid June flattened out some/rolled over (in the third Wave 5 monthly upcycle), and, SPX appears to have put in a minor intermediate term cycle high on 11-22-06, that was tested yesterday when a slightly lower bearish Wave B double top occurred. This means that SPX is now doing a short term Wave C down that points to more HUI/NEM/XAU weakness on Monday, and, probably means that HUI/NEM/XAU put in a minor intermediate term cycle high today, lagging SPX by over a week.
SPX's technical indicators have deteriorated dramatically. RSI, Stochastics, MACD, and Williams %R have all trended down since late October, which is a very bearish divergence with SPX/price, which probably peaked on 11-22-06.
Assuming that SPX hit a minor intermediate term cycle high on 11-22-06, then HUI/XAU are almost certainly on the verge of the vicious 30-45% decline that their cycles indicate should occur. In the Wave 2 Cyclical Bear Market HUI/XAU should hit/approach their primary Secular Bull Market/very long term upcycle trendlines (see charts 3 and 5 at http://www.joefrocks.com/GoldStockCharts.html), just as reliable lead indicator NEM did on 10-4-06 (see chart 4 at the link above), with a likely Wave 2 Cyclical Bear Market cycle low at 39.84.
There are many other reasons to expect a vicious decline, such as the 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), the very bearish COT data (see http://www.cftc.gov/dea/options/deacmxsof.htm, there was massive long liquidation by the gold Commercial Traders, who were also short squeezed in a big way), deteriorating technical indicators, etc.
HUI/NEM/XAU should be about to fall off a cliff the next few sessions, which will be 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 3 and 5 at http://www.joefrocks.com/GoldStockCharts.html.
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
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
1:23 PM
