Early SPX (S & P 500) Strength Led To Brief Strength
Early SPX (S & P 500) strength (the Fed spiked the punch today as they almost always do on Thursday, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE) led to brief modest HUI/NEM/XAU strength early today due to index fund program buying. Normally with SPX up more than 10 points (as it was early today) HUI/NEM/XAU would be up well over 1% and possibly more than 2%. Relatively modest SPX moves usually translate into large HUI/NEM/XAU moves, which is why I think a substantial SPX decline will be a huge/major factor behind a dramatic decline in HUI/XAU (to their primary secular Bull Market very long term upcycle trendlines since November (HUI)/October (XAU) 2000). The fact that HUI/NEM/XAU only managed brief modest gains early today is a bearish sign.
HUI/XAU have experienced very sharp declines since hitting minor intermediate term cycle highs on 12-5, while NEM has only fallen modestly so far since hitting a likely minor intermediate term cycle high at 47.80 on 12-8. Once NEM starts to really plunge, HUI/XAU weakness should become severe.
My thoughts on the new potential lead indicator to improve very short term (days)/short term timing. I'm going to let the cat out of the bag. The stock that appears to be a great lead indicator for SPX, and therefore for HUI/NEM/XAU short/intermediate term (days/weeks/sometimes months), is Walmart (WMT), see http://finance.yahoo.com/q/ta?s=%5EHUI&t=3m&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC. When WMT underperforms SPX that points to SPX/HUI/NEM/XAU weakness and vice versa. Recently WMT has been dramatically underperforming SPX which points to substantial SPX/HUI/NEM/XAU weakness. SPX appears to be putting in a minor intermediate term cycle high (cycle since mid June), and may have peaked today. Elliott Wave and the fact that SPX's minor intermediate term upcycle has been rolling over told me that anyway, but, the more useful info the better.
Probably the best tool for short term timing is Elliott Wave patterns. NEM was clearly in a very short term upcycle's Wave 5 late yesterday, which correctly meant (it appears as I write this) that it would probably turn down early today. That's great market timing when you can confidently say that a stock will probably (obviously can never be 100% certain) turn down EARLY the next day, not just the next day but early the next day. That very short term upcycle was a Wave B, so, NEM should now be in a very short term Wave C and should soon start to plunge. Since sometimes an Elliott Wave count isn't clear for a stock/index/commodity, that's why I look at three (HUI/NEM/XAU), with NEM's being the most important/useful because it's a very reliable lead indicator, partly/maybe largely due to it being a component of the S & P 500.
Watch reliable lead indicator NEM's Elliott Wave patterns. Since hitting a minor intermediate term cycle high at 47.80 on 12-8 NEM did an Elliott Wave ABC down up down downcycle pattern (a very short term Wave A downcycle) that bottomed early on Tuesday, then proceeded to do an Elliott Wave 12345 up down up down up upcycle pattern (a very short term Wave B upcycle), that was in the third/Wave 5 upcycle early today (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==), so, as expected, NEM probably turned down early today, and, HUI/XAU weakness is likely to soon become severe, as NEM's weakness increases.
HUI/XAU are in Wave C of Wave C of the Wave 2 Cyclical Bear Market since 5-11-06. In the next 3-6 weeks HUI/XAU should do exactly what reliable lead indicator NEM has already done, which is to decline to their primary multi-year Secular Bull Market/very long term upcycle trendlines, currently at 200-220ish (could turn up which is why there's a wide range) for HUI and at 85-90ish for the XAU, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html. NEM did a Wave A down, a Wave B up, then it's Wave C did an ABC down up down pattern, which is exactly what HUI/XAU appear to be doing, with Wave C of Wave C probably having begun Tuesday 12-5, when minor intermediate term cycle highs occurred, see chart one at http://www.joefrocks.com/GoldStockCharts.html.
The XAU has downside gaps at 138.37, and 132.67. NEM has downside gaps at 45.73, 44.88, 44.03, 42.21, 41.83, 41.09, and 40.83. The XAU has a bearish breakaway gap to the downside at 144.96 from Tuesday's open.
NEM clearly broke it's minor intermediate term upcycle trendline since 10-4-06 on Tuesday, so, the vicious decline may soon rear it's head in a big way. Option expiration is tomorrow, and, I think it's a triple or quadruple "witching" quarterly one, so, that will probably add to the volatility.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 6 and 8 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 7 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
HUI/XAU have experienced very sharp declines since hitting minor intermediate term cycle highs on 12-5, while NEM has only fallen modestly so far since hitting a likely minor intermediate term cycle high at 47.80 on 12-8. Once NEM starts to really plunge, HUI/XAU weakness should become severe.
My thoughts on the new potential lead indicator to improve very short term (days)/short term timing. I'm going to let the cat out of the bag. The stock that appears to be a great lead indicator for SPX, and therefore for HUI/NEM/XAU short/intermediate term (days/weeks/sometimes months), is Walmart (WMT), see http://finance.yahoo.com/q/ta?s=%5EHUI&t=3m&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC. When WMT underperforms SPX that points to SPX/HUI/NEM/XAU weakness and vice versa. Recently WMT has been dramatically underperforming SPX which points to substantial SPX/HUI/NEM/XAU weakness. SPX appears to be putting in a minor intermediate term cycle high (cycle since mid June), and may have peaked today. Elliott Wave and the fact that SPX's minor intermediate term upcycle has been rolling over told me that anyway, but, the more useful info the better.
Probably the best tool for short term timing is Elliott Wave patterns. NEM was clearly in a very short term upcycle's Wave 5 late yesterday, which correctly meant (it appears as I write this) that it would probably turn down early today. That's great market timing when you can confidently say that a stock will probably (obviously can never be 100% certain) turn down EARLY the next day, not just the next day but early the next day. That very short term upcycle was a Wave B, so, NEM should now be in a very short term Wave C and should soon start to plunge. Since sometimes an Elliott Wave count isn't clear for a stock/index/commodity, that's why I look at three (HUI/NEM/XAU), with NEM's being the most important/useful because it's a very reliable lead indicator, partly/maybe largely due to it being a component of the S & P 500.
Watch reliable lead indicator NEM's Elliott Wave patterns. Since hitting a minor intermediate term cycle high at 47.80 on 12-8 NEM did an Elliott Wave ABC down up down downcycle pattern (a very short term Wave A downcycle) that bottomed early on Tuesday, then proceeded to do an Elliott Wave 12345 up down up down up upcycle pattern (a very short term Wave B upcycle), that was in the third/Wave 5 upcycle early today (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==), so, as expected, NEM probably turned down early today, and, HUI/XAU weakness is likely to soon become severe, as NEM's weakness increases.
HUI/XAU are in Wave C of Wave C of the Wave 2 Cyclical Bear Market since 5-11-06. In the next 3-6 weeks HUI/XAU should do exactly what reliable lead indicator NEM has already done, which is to decline to their primary multi-year Secular Bull Market/very long term upcycle trendlines, currently at 200-220ish (could turn up which is why there's a wide range) for HUI and at 85-90ish for the XAU, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html. NEM did a Wave A down, a Wave B up, then it's Wave C did an ABC down up down pattern, which is exactly what HUI/XAU appear to be doing, with Wave C of Wave C probably having begun Tuesday 12-5, when minor intermediate term cycle highs occurred, see chart one at http://www.joefrocks.com/GoldStockCharts.html.
The XAU has downside gaps at 138.37, and 132.67. NEM has downside gaps at 45.73, 44.88, 44.03, 42.21, 41.83, 41.09, and 40.83. The XAU has a bearish breakaway gap to the downside at 144.96 from Tuesday's open.
NEM clearly broke it's minor intermediate term upcycle trendline since 10-4-06 on Tuesday, so, the vicious decline may soon rear it's head in a big way. Option expiration is tomorrow, and, I think it's a triple or quadruple "witching" quarterly one, so, that will probably add to the volatility.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 6 and 8 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 7 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
7:33 AM
