HUI/XAU Should Put In A Very Short Term Wave 5 Cycle High

HUI/XAU should put in a Wave 5 cycle high for the Wave B of Wave A upcycle (since last Friday) some time today or on Wednesday (on Tuesday the market is closed in remembrance of Gerald R. Ford). HUI/XAU's very short term Wave 1 and Wave 3 cycle highs occurred early on both Tuesday and Thursday, 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==. The very short term Wave 5 cycle high will probably be only modestly higher than the Wave 3 one that occurred early yesterday, in other words, it'll probably occur in rollover mode.

NEM's short term/Wave B of Wave A cycle high (minor intermediate term downcycle since 12-8-06) occurred on Tuesday, see http://finance.yahoo.com/q/ta?s=nem&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. NEM is leading as usual, in this case to the downside.

US markets will be closed on Tuesday in remembrance of Gerald R. Ford (closed Monday for New Years Day). Canadian markets will reopen on Tuesday.

To all my readers around the world, may the force be with us all in 2007 and God Bless you. Ciao. Joe Ferrazzano

Here's my 2007 prediction:

Gold, HUI, XAU will finish their Wave 2 Cyclical Bear Market (began 5-11-06), and, will hit their primary multi year Secular Bull Market/very long term upcycle trendlines early in 2007, at $525-550ish for gold, at 200-220 for HUI (could turn up which is why there's a wide range), and at 85-90 for the XAU, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html.

Reliable lead indicator NEM already bottomed at 39.84 on 10-4-06 and entered a Wave 3 Cyclical Bull Market, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html. After gold, HUI, XAU bottom in early 2007, they should be in a 5-7 year Wave 3 Cyclical Bull Market, and, "Trade the Cycles" (therefore I) will turn bullish.

Early 2007 will be a "disaster" (great buying opportunity if you get cycles) for not only gold, HUI, XAU, but, for probably most sectors, since SPX (S & P 500) appears to have put in a major intermediate term cycle high (potentially a very important Cyclical Bull Market cycle high for the cycle since October 2002) for the cycle since mid June.

SPX probably peaked on 12-18-06, and, put in a bearish double top cycle high with 12-17-06's cycle high. Substantial SPX (S & P 500) weakness will lead to massive index fund program selling that will drive gold, HUI, XAU down to their primary multi year Secular Bull Market/very long term upcycle trendlines early in 2007. Most sectors will get hammered. This concludes my 2007 prediction.

Many gold "gurus" (jackass is usually a better word when it comes to market timing) talk about the demise of the major averages as being good for gold, HUI, XAU. It IS on a Secular/very long term 15-20 year basis, BUT, near term index fund program selling will crush gold, HUI, XAU when SPX declines substantially.

The NEM Lead Indicator was a bearish -0.70% versus the XAU on 12-28, was a very bearish -1.35% on 12-27, was -0.28% on 12-26, -0.35% on 12-22, +0.30% on 12-21, -0.76% on 12-20, -1.07% on 12-19, and was -0.31% on 12-18. The NEM Lead Indicator turned bearish again on 12-18, which is when SPX (S & P 500) peaked. This is no surprise since NEM is a component of SPX, and, a big part of the reason why it's such a great lead indicator is due to it being in the S & P 500, because index fund program trading is such a huge factor (about 70% of the dollar volume on the NYSE) that causes one to have to time SPX along with HUI/NEM/XAU.

The WMT lead indicator was a modestly bearish -0.18% versus SPX on 12-28. A very bearish WMT (Walmart) Lead Indicator at -0.59% versus the S & P 500 (SPX) on Wednesday (since WMT/SPX are much less volatile than HUI/NEM/XAU -0.59% is very bearish as opposed to bearish) correctly pointed to weakness being the tone yesterday (downtrend after the spike at the open) for HUI/NEM/XAU, and, correctly pointed to some weakness in SPX, that probably would have been much worse if it wasn't for a massive $18.25 Billion in Fed Credit yesterday, on top of massive Fed Credit since 12-14.

Massive Fed Credit since 12-14 (see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE) has been keeping SPX's downtrend since 12-18 reasonable thanks to index fund program trading, and, so far has prevented HUI/NEM/XAU from experiencing any vicious 3-5%+ declines in a single session.

Tuesday's very bullish WMT (Walmart) Lead Indicator at +0.81% versus the S & P 500 (SPX) correctly portended significant SPX strength on Wednesday, which propped up HUI/NEM/XAU due to index fund program buying. The WMT (Walmart) Lead Indicator will probably help to finetune the NEM Lead Indicator for very short term timing, along with Elliott Wave of course.

NEM has a bearish double top at 47.80 on 12-8 and 47.77 on 12-15, with 47.80 on 12-8 being a minor intermediate term cycle high for the cycle that began on 10-4-06. The next few sessions may bring brutal declines. For anyone to suggest that you shouldn't seriously consider taking profits now means they don't understand what's going on.

HUI could fall all the way to 200ish in the next few weeks (it's Secular Bull Market PRIMARY trendline, see chart 6 at http://www.joefrocks.com/GoldStockCharts.html), with much of that decline probably due to program selling related to SPX (S & P 500) weakness, notice how HUI has been following SPX the past 5 sessions, 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.

Many gold/silver stocks are likely to decline 30-40-50%+ FROM HERE in the next few weeks. You need to determine where the Secular Bull Market PRIMARY trendline is for your gold/silver stocks, see charts 6, 7, and 8 at http://www.joefrocks.com/GoldStockCharts.html for examples. I haven't seen a single gold/silver writer who understands that a Cyclical Bear Market is in effect right now.

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