The Gold COT Data Points To Some Significant Weakness This Week
The gold COT (Commitments Of Traders) data points to some significant weakness this week, since the non contrarian gold Commercial Traders made an unusually large (> 10%) addition to their long position, which makes them short term contrarian, while the contrarian/clueless Speculators engaged in what borders on an unusually large (> 10%) degree of long liquidation, see last data at http://www.cftc.gov/dea/options/deacmxsof.htm, which makes them short term non contrarian. This jives with the expected scenario in which NEM will fill it's downside gap at 44.03 and the XAU will fill it's downside gap at 132.67, then an important short term cycle low should occur (read on).
Gaps often help a great deal with market timing since most get filled (breakaway gaps provide insight obviously as well), and, since clusters of gaps tend to get filled during the same upcycle or downcycle, with important cycle lows/highs often occurring after a cluster of gaps get filled, great insight into when cycle lows/highs will occur can be gleaned from when a cluster of gaps gets filled. NEM has/had downside gaps at 45.73 (filled), 44.88 (filled), 44.03, 42.21, 41.83, 41.09, and 40.83. The XAU has/had downside gaps at 138.37 (filled),132.67.
It makes sense (this has happened many times) that NEM's Wave A down of it's minor intermediate term downcycle since 12-8-06 (cycle high at 47.80) will bottom after it's first cluster of gaps gets filled (45.73 (filled), 44.88 (filled), 44.03), and, it looks like the XAU will bottom shortly after filling it's gaps at 138.37 (filled) and 132.67.
HUI/XAU are in a major downcycle (Wave C of Wave C of their Cyclical Bear Market since 5-11-06, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html) since putting in minor intermediate term cycle highs on 12-5-06, so, this upcoming cycle low may just be Wave A of Wave A NOT the entire Wave A.
In the case of HUI/XAU it's impossible to tell whether it's the entire Wave A or Wave A OF Wave A, but, in NEM's case it's very likely that Wave A will bottom after it's downside gap at 44.03 gets filled. After that a substantial short term upcycle (NEM's Wave B of it's minor intermediate term downcycle since 12-8-06) is likely based on the COT data.
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 charts one and two at http://www.joefrocks.com/GoldStockCharts.html.
As a long term multi-year investor in any stock, commodity, etc. you want to buy near the primary multi-year Secular Bull Market/very long term upcycle trendline, for example NEM's is at 40ish right now, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html. Therefore, NEM right now would be a great buy in the 40-42 range. Gold's primary multi-year Secular Bull Market/very long term upcycle trendline is at $525ish right now, so, gold would be a great buy in the $525-550 range. When the vast majority of gold writers say it's a great time to buy or are bullish, as they almost always are, it's rarely a good time for long term investors to buy. The vast majority of gold writers couldn't time their way out of a paper bag. They tend to be terrible.
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
Gaps often help a great deal with market timing since most get filled (breakaway gaps provide insight obviously as well), and, since clusters of gaps tend to get filled during the same upcycle or downcycle, with important cycle lows/highs often occurring after a cluster of gaps get filled, great insight into when cycle lows/highs will occur can be gleaned from when a cluster of gaps gets filled. NEM has/had downside gaps at 45.73 (filled), 44.88 (filled), 44.03, 42.21, 41.83, 41.09, and 40.83. The XAU has/had downside gaps at 138.37 (filled),132.67.
It makes sense (this has happened many times) that NEM's Wave A down of it's minor intermediate term downcycle since 12-8-06 (cycle high at 47.80) will bottom after it's first cluster of gaps gets filled (45.73 (filled), 44.88 (filled), 44.03), and, it looks like the XAU will bottom shortly after filling it's gaps at 138.37 (filled) and 132.67.
HUI/XAU are in a major downcycle (Wave C of Wave C of their Cyclical Bear Market since 5-11-06, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html) since putting in minor intermediate term cycle highs on 12-5-06, so, this upcoming cycle low may just be Wave A of Wave A NOT the entire Wave A.
In the case of HUI/XAU it's impossible to tell whether it's the entire Wave A or Wave A OF Wave A, but, in NEM's case it's very likely that Wave A will bottom after it's downside gap at 44.03 gets filled. After that a substantial short term upcycle (NEM's Wave B of it's minor intermediate term downcycle since 12-8-06) is likely based on the COT data.
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 charts one and two at http://www.joefrocks.com/GoldStockCharts.html.
As a long term multi-year investor in any stock, commodity, etc. you want to buy near the primary multi-year Secular Bull Market/very long term upcycle trendline, for example NEM's is at 40ish right now, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html. Therefore, NEM right now would be a great buy in the 40-42 range. Gold's primary multi-year Secular Bull Market/very long term upcycle trendline is at $525ish right now, so, gold would be a great buy in the $525-550 range. When the vast majority of gold writers say it's a great time to buy or are bullish, as they almost always are, it's rarely a good time for long term investors to buy. The vast majority of gold writers couldn't time their way out of a paper bag. They tend to be terrible.
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
12:40 PM
