HUI/NEM/XAU Have Probably Put In Minor Intermediate Term Cycle Highs
HUI/NEM/XAU probably put in Minor Intermediate Term cycle highs (began 10-4-06) early on Friday (HUI/NEM)/late Thursday (XAU) versus SPX (S & P 500) doing so on 11-22-06. Based on recent research (see previous post http://tradethecycles.blogspot.com/2006/12/two-new-charts-spx-s-p-500-and.html) I'm going to be using SPX (following it very closely) as a lead indicator in addition to reliable lead indicator NEM. A big part of the reason why NEM is such a good lead indicator for HUI/XAU is that it's in SPX, which is the first index to be affected by programmed index fund trading.
Since SPX is leading HUI/NEM/XAU by a little over a week HUI/NEM/XAU have almost certainly hit an important peak. The long lag time between SPX and HUI/NEM/XAU is probably a sign that it is an important peak (multi month Minor Intermediate Term cycle high).
A substantial SPX correction that will lead to major programmed index fund selling is what will probably cause HUI/XAU to fall 35-45% to 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 over the next 3-6 weeks and conclude their Wave 2 Cyclical Bear Market that began 5-11-06, see charts 5 and 7 at http://www.joefrocks.com/GoldStockCharts.html. Reliable lead indicator NEM probably concluded it's Wave 2 Cyclical Bear Market (began 1-31-06) at 39.84 on 10-4-06.
The most important thing to keep in mind is HUI/XAU's Wave 2 Cyclical Bear Market (began 5-11-06). They HAVE TO hit/at least closely approach their primary Secular Bull Market/very long term upcycle trendlines. Primary Secular trendlines are basic technical analysis. As a very long term (7+ years) investor the ONLY time you should be buying is close to the primary Secular Bull Market trendline, currently at 200-220 for HUI, 40ish for NEM, 85-90 for the XAU, and at 525ish for gold.
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 30-45%+ decline for HUI/XAU. Since 10-4-06 HUI/XAU have rallied beyond (another reason one must understand cycles, it's very likely to be a major fakeout) their Wave 2 Cyclical Bear Market (began 5-11-06) downtrend lines, but, 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 30-45%+ 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
Since SPX is leading HUI/NEM/XAU by a little over a week HUI/NEM/XAU have almost certainly hit an important peak. The long lag time between SPX and HUI/NEM/XAU is probably a sign that it is an important peak (multi month Minor Intermediate Term cycle high).
A substantial SPX correction that will lead to major programmed index fund selling is what will probably cause HUI/XAU to fall 35-45% to 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 over the next 3-6 weeks and conclude their Wave 2 Cyclical Bear Market that began 5-11-06, see charts 5 and 7 at http://www.joefrocks.com/GoldStockCharts.html. Reliable lead indicator NEM probably concluded it's Wave 2 Cyclical Bear Market (began 1-31-06) at 39.84 on 10-4-06.
The most important thing to keep in mind is HUI/XAU's Wave 2 Cyclical Bear Market (began 5-11-06). They HAVE TO hit/at least closely approach their primary Secular Bull Market/very long term upcycle trendlines. Primary Secular trendlines are basic technical analysis. As a very long term (7+ years) investor the ONLY time you should be buying is close to the primary Secular Bull Market trendline, currently at 200-220 for HUI, 40ish for NEM, 85-90 for the XAU, and at 525ish for gold.
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 30-45%+ decline for HUI/XAU. Since 10-4-06 HUI/XAU have rallied beyond (another reason one must understand cycles, it's very likely to be a major fakeout) their Wave 2 Cyclical Bear Market (began 5-11-06) downtrend lines, but, 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 30-45%+ 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
7:37 AM
