HUI Is Down Nearly 5% From Tuesday's Likely Minor Intermediate Term Cycle High
HUI is down nearly 5% from Tuesday's likely minor intermediate term cycle high, see http://finance.yahoo.com/q/ta?t=5d&s=%5EHUI&l=off&z=l&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=&c=%5EGSPC. 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 now in a Wave C in which HUI should put in a cycle low well below yesterday's early Wave A cycle low, which points to more weakness on Monday at least.
The fact that HUI/XAU (today) didn't respond to a very bullish short term NEM Lead Indicator at +1.01% versus the XAU today/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.
The fact that reliable lead indicator NEM took out what appeared to be a minor intermediate term cycle high at 47.60 on Tuesday, with a session cycle high today at 47.80, normally would lead me to believe that HUI/XAU didn't hit minor intermediate term cycle highs yet. However, the fact that NEM is running counter to HUI/XAU cyclewise, having hit a Wave 2 Cyclical Bear Market cycle low at 39.84 on 10-4-06, which was probably the end of that Bear Market that began on 1-31-06, means that NEM is probably leading to the upside by peaking after HUI/XAU.
HUI/XAU's minor intermediate term upcycle trendlines have broken down, and, HUI appears to have hit a 2% follow through minor intermediate term cycle sell signal, but, I need to do the chart this weekend and see. If HUI hit a 2% follow through minor intermediate term cycle sell signal, then HUI and the XAU probably put in minor intermediate term cycle highs on Tuesday versus NEM possibly doing so today.
HUI/XAU's technical indicators such as RSI and Stochastics are clearly on sell signals (are trending sharply lower) and the latest COT (Commitments Of Traders) data clearly points to weakness as the tone/trend next week, with 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.
NEM has an upside gap at 48.19 that may get filled short term, so, more upside can't be ruled out.
Reliable lead indicator NEM's minor intermediate term upcycle since 10-4-06 is extremely flat/has rolled over dramatically, and, it's monthly upcycle since mid November is very flat, the peaks have flattened out/rolled over dramatically.
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 5 and 7 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.
The XAU has downside gaps at 141.59, 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.
SPX's short term (http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==) and minor intermediate term upcycle (since mid June) are rolling over, so HUI/NEM/XAU weakness should intensify due to program trader/index fund selling.
A comment on chart three at http://www.joefrocks.com/GoldStockCharts.html. The Wave 2 Cyclical Bear Market (began 5-11-06) downtrend line shown wasn't a well established downtrend line (only one lower cycle high) and the required 5% follow through for a major buy didn't occur, so, the fact that HUI/XAU broke that downtrend line isn't important. Note how, due to program trading, HUI follows SPX closely on the five day intraday chart and for longer cycle timeframes as well (short term and intermediate term SPX tends to have a huge influence), 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=%5EGSPC.
Substantial SPX (S & P 500) weakness over the next 3-6 weeks will probably play a huge part in HUI/XAU's vicious decline due to index fund program trading. SPX is the primary lead index for program trading. As SPX components like NEM/FCX get sold they affect other indexes, like HUI/XAU, which leads to selling of the components in those indexes.
SPX is in the process of putting in a minor intermediate term cycle high for the cycle since mid June. SPX's peaks are flattening out/rolling over, it's technical indicators are overbought, and, they're diverging with SPX/price since late October (look at SPX's peaks versus RSI, Stochastics, Williams %R, MACD).
As a long term (multi year)/very long term (multi decade) investor one should ALWAYS buy near the primary multi year or multi decade uptrend line. The shorter parabolic upcycles are great trading opportunities NOT long term investing opportunities. The many complacent/clueless gold writers who think investors should have been buying gold recently are clueless, because gold's primary multi year uptrend line since April 2001 is at 525ish right now, and, more importantly, gold has been in a Wave 2 Cyclical Bear Market since mid May.
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 5 and 7 at http://www.joefrocks.com/GoldStockCharts.html.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 5 and 7 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 6 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
The fact that HUI/XAU (today) didn't respond to a very bullish short term NEM Lead Indicator at +1.01% versus the XAU today/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.
The fact that reliable lead indicator NEM took out what appeared to be a minor intermediate term cycle high at 47.60 on Tuesday, with a session cycle high today at 47.80, normally would lead me to believe that HUI/XAU didn't hit minor intermediate term cycle highs yet. However, the fact that NEM is running counter to HUI/XAU cyclewise, having hit a Wave 2 Cyclical Bear Market cycle low at 39.84 on 10-4-06, which was probably the end of that Bear Market that began on 1-31-06, means that NEM is probably leading to the upside by peaking after HUI/XAU.
HUI/XAU's minor intermediate term upcycle trendlines have broken down, and, HUI appears to have hit a 2% follow through minor intermediate term cycle sell signal, but, I need to do the chart this weekend and see. If HUI hit a 2% follow through minor intermediate term cycle sell signal, then HUI and the XAU probably put in minor intermediate term cycle highs on Tuesday versus NEM possibly doing so today.
HUI/XAU's technical indicators such as RSI and Stochastics are clearly on sell signals (are trending sharply lower) and the latest COT (Commitments Of Traders) data clearly points to weakness as the tone/trend next week, with 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.
NEM has an upside gap at 48.19 that may get filled short term, so, more upside can't be ruled out.
Reliable lead indicator NEM's minor intermediate term upcycle since 10-4-06 is extremely flat/has rolled over dramatically, and, it's monthly upcycle since mid November is very flat, the peaks have flattened out/rolled over dramatically.
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 5 and 7 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.
The XAU has downside gaps at 141.59, 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.
SPX's short term (http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==) and minor intermediate term upcycle (since mid June) are rolling over, so HUI/NEM/XAU weakness should intensify due to program trader/index fund selling.
A comment on chart three at http://www.joefrocks.com/GoldStockCharts.html. The Wave 2 Cyclical Bear Market (began 5-11-06) downtrend line shown wasn't a well established downtrend line (only one lower cycle high) and the required 5% follow through for a major buy didn't occur, so, the fact that HUI/XAU broke that downtrend line isn't important. Note how, due to program trading, HUI follows SPX closely on the five day intraday chart and for longer cycle timeframes as well (short term and intermediate term SPX tends to have a huge influence), 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=%5EGSPC.
Substantial SPX (S & P 500) weakness over the next 3-6 weeks will probably play a huge part in HUI/XAU's vicious decline due to index fund program trading. SPX is the primary lead index for program trading. As SPX components like NEM/FCX get sold they affect other indexes, like HUI/XAU, which leads to selling of the components in those indexes.
SPX is in the process of putting in a minor intermediate term cycle high for the cycle since mid June. SPX's peaks are flattening out/rolling over, it's technical indicators are overbought, and, they're diverging with SPX/price since late October (look at SPX's peaks versus RSI, Stochastics, Williams %R, MACD).
As a long term (multi year)/very long term (multi decade) investor one should ALWAYS buy near the primary multi year or multi decade uptrend line. The shorter parabolic upcycles are great trading opportunities NOT long term investing opportunities. The many complacent/clueless gold writers who think investors should have been buying gold recently are clueless, because gold's primary multi year uptrend line since April 2001 is at 525ish right now, and, more importantly, gold has been in a Wave 2 Cyclical Bear Market since mid May.
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 5 and 7 at http://www.joefrocks.com/GoldStockCharts.html.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 5 and 7 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 6 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
1:17 PM
