HUI Hit A 2% Follow Through Minor Intermediate Term Cycle Sell Signal
HUI hit a 2% follow through minor intermediate term cycle sell signal on 12-7, see chart one at http://www.joefrocks.com/GoldStockCharts.html, two sessions after a minor intermediate term cycle high occurred early on 12-5, for the cycle that began 10-4-06. Note the Elliott Wave patterns and that shorter Elliott Wave patterns occurred leading up to Wave 1, 3, and 5 cycle highs. The Elliott Wave 12345 upcycle patterns leading up to the Wave 3 and 5 cycle highs take some effort to see, but they're there.
After hitting a minor intermediate term cycle high early on 12-5 HUI did a two day Wave A down that bottomed early on Thursday, then did a Wave B up for a few hours mid session on Thursday, and, entered a very short term (few days) Wave C downcycle that's done an Elliott Wave ABC down up down pattern, and, is still in a Wave C, in which HUI should put in a cycle low well below Thursday's early Wave A cycle low, which points to more weakness on Monday at least.
Some factors pointing to precious metals sector weakness early next week:
1. The primary consideration is the fact that HUI/XAU are in Wave A down of a likely 3-6 week 35-45% downcycle (Wave C of Wave C of their Wave 2 Cyclical Bear Market since 5-11-06), in which they should reach 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.
2. Within that Wave A down since early 12-5 HUI/XAU are currently in a very short term Wave C downcycle since late Thursday, in which they should bottom well below Thursday's early very short term Wave A cycle low.
3. The fact that on Friday 12-8 HUI/XAU didn't respond to a very bullish short term NEM Lead Indicator at +1.01% versus the XAU on 12-8, +0.87% on 12-7, +0.27% on 12-6, and +1.19% on 12-5, may be a sign that HUI/XAU are about to go parabolic in a big way on the downside, and, the expected 3-6 week 35-45%+ vicious decline may make itself obvious early next week.
4. The latest gold COT data is bearish and clearly points to weakness being the tone/trend next week: the non contrarian gold Commercial Traders trading significantly net short, while the contrarian gold Speculators traded significantly net long, see http://www.cftc.gov/dea/options/deacmxsof.htm. The gold COT data is probably more bearish than it seems, because the gold Commercial Traders engaged in massive long liquidation the prior week, which lessened the need to liquidate last week, AND, the short covering they did was probably the last part of the massive short squeeze they got caught in the week before, so the short covering probably isn't a modestly bullish sign that would normally point to some significant strength next week.
5. HUI/XAU's technical indicators such as RSI and Stochastics are clearly on sell signals (are trending sharply lower).
6. XAU Implied Volatility rose less in percentage terms (rose +1.00% to
30.690 on 12-8 from 30.385 on 12-7 ) than the XAU fell on Friday (-1.73%), which is a significant (0.50-1.99%) rise in complacency that points to some significant weakness on Monday (+1.00% + -1.73% = -0.73% decline in the XAU wall of worry = +0.73% rise in complacency).
7. The Fed meeting on Tuesday could lead to additional weakness due to uncertainty over the wording of their statement.
8. Fed Credit for the week ending 12-6-06 fell -$1.641 Billion, and, was only $2.5 Billion on Friday versus the average $6 Billionish. They spiked the punch as usual on Thursday with $13.75 Billion in repos, but, that's close to average for punch spiking Thursday. Fed Credit fuels the index fund program traders that are a huge short term/intermediate term influence on most sectors, with the S & P 500 being the lead index. They do 45% of the daily trading volume on the NYSE and probably about 70% of the dollar volume (huge).
HUI/NEM/XAU should be in Wave A down of the likely 3-6 weekish vicious 35-45%+ decline for HUI/XAU. HUI/XAU 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 35-45%+ 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 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html.
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
After hitting a minor intermediate term cycle high early on 12-5 HUI did a two day Wave A down that bottomed early on Thursday, then did a Wave B up for a few hours mid session on Thursday, and, entered a very short term (few days) Wave C downcycle that's done an Elliott Wave ABC down up down pattern, and, is still in a Wave C, in which HUI should put in a cycle low well below Thursday's early Wave A cycle low, which points to more weakness on Monday at least.
Some factors pointing to precious metals sector weakness early next week:
1. The primary consideration is the fact that HUI/XAU are in Wave A down of a likely 3-6 week 35-45% downcycle (Wave C of Wave C of their Wave 2 Cyclical Bear Market since 5-11-06), in which they should reach 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.
2. Within that Wave A down since early 12-5 HUI/XAU are currently in a very short term Wave C downcycle since late Thursday, in which they should bottom well below Thursday's early very short term Wave A cycle low.
3. The fact that on Friday 12-8 HUI/XAU didn't respond to a very bullish short term NEM Lead Indicator at +1.01% versus the XAU on 12-8, +0.87% on 12-7, +0.27% on 12-6, and +1.19% on 12-5, may be a sign that HUI/XAU are about to go parabolic in a big way on the downside, and, the expected 3-6 week 35-45%+ vicious decline may make itself obvious early next week.
4. The latest gold COT data is bearish and clearly points to weakness being the tone/trend next week: the non contrarian gold Commercial Traders trading significantly net short, while the contrarian gold Speculators traded significantly net long, see http://www.cftc.gov/dea/options/deacmxsof.htm. The gold COT data is probably more bearish than it seems, because the gold Commercial Traders engaged in massive long liquidation the prior week, which lessened the need to liquidate last week, AND, the short covering they did was probably the last part of the massive short squeeze they got caught in the week before, so the short covering probably isn't a modestly bullish sign that would normally point to some significant strength next week.
5. HUI/XAU's technical indicators such as RSI and Stochastics are clearly on sell signals (are trending sharply lower).
6. XAU Implied Volatility rose less in percentage terms (rose +1.00% to
30.690 on 12-8 from 30.385 on 12-7 ) than the XAU fell on Friday (-1.73%), which is a significant (0.50-1.99%) rise in complacency that points to some significant weakness on Monday (+1.00% + -1.73% = -0.73% decline in the XAU wall of worry = +0.73% rise in complacency).
7. The Fed meeting on Tuesday could lead to additional weakness due to uncertainty over the wording of their statement.
8. Fed Credit for the week ending 12-6-06 fell -$1.641 Billion, and, was only $2.5 Billion on Friday versus the average $6 Billionish. They spiked the punch as usual on Thursday with $13.75 Billion in repos, but, that's close to average for punch spiking Thursday. Fed Credit fuels the index fund program traders that are a huge short term/intermediate term influence on most sectors, with the S & P 500 being the lead index. They do 45% of the daily trading volume on the NYSE and probably about 70% of the dollar volume (huge).
HUI/NEM/XAU should be in Wave A down of the likely 3-6 weekish vicious 35-45%+ decline for HUI/XAU. HUI/XAU 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 35-45%+ 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 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html.
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
9:22 AM
