.....................New HUI Three Month Chart
The new HUI chart shows that HUI broke it's straight minor intermediate term upcycle trendline (since 10-4-06) yesterday, but closed slightly above it, see chart one at http://www.joefrocks.com/GoldStockCharts.html. One can see the substantial follow through since HUI's parabolic minor intermediate term upcycle trendline (since 10-4-06) clearly broke down on 12-7, when it flashed a 2% follow through sell signal, see last week's chart (chart two) at http://www.joefrocks.com/GoldStockCharts.html. Parabolic shaped cycle trendlines (in concert with Elliott Wave and gaps) get one out well ahead of traditional straight trendlines.
Yesterday reliable lead indicator NEM appears to have completed a very short term Wave B test (cycle high at 47.77 yesterday) of 12-8's likely minor intermediate term cycle high at 47.80. If so then NEM should be about to plunge and HUI/XAU with it.
The XAU Put/Call Ratio for the January expiration, at 0.63657, is dramatically lower than the final December XAU Put/Call Ratio at 0.99706, which reflects a high level of complacency among XAU traders that's a major negative.
XAU Implied Volatility has been declining since the XAU put in a minor intermediate term cycle high on 12-5, which is a very bearish sign because it's a major rise in complacency that portends substantial weakness. One wants to see fear come in via a sharply rising XAU Implied Volatility when the XAU falls sharply. Here's the data since 12-5, with weakness meaning that the sum of the daily % change in XAU/XAU Implied Volatility was negative (a decline in the XAU wall of worry which is a rise in complacency): 28.240 on 12-15 weakness, 28.895 on 12-14 weakness, 30.175 on 12-13 weakness, 31.010 on 12-12 weakness, 31.035 on 12-11 strength, 30.690 on 12-8 weakness, 30.385 on 12-7 weakness, 31.285 on 12-6 weakness, 31.230 on 12-5 weakness.
XAU Implied Volatility points to potential severe weakness on Monday, since it fell -2.27% to 28.240 on 12-15 from 28.895 on 12-14 versus a -1.30% decline in the XAU, which is a very sharp (3-6%) +3.57% rise in complacency (-2.27% + -1.30% = -3.57% decline in the XAU wall of worry = +3.57% rise in complacency)
HUI/XAU were in an intraday Elliott Wave 12345 upcycle towards session's end yesterday and "need to do" the third/Wave 5 upcycle, so, it looks like they will experience brief strength on Monday followed by a potentially sharp drop, because SPX appears to be in a short term and possibly also an important minor intermediate term downcycle since early Friday, see http://finance.yahoo.com/q/ta?t=5d&s=%5EGSPC&l=off&z=l&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=%5Ehui.
Notice in the 5 day SPX (S & P 500) chart versus HUI at the link below that SPX held HUI together much of this week due to index fund program buying. Once SPX began a modest downtrend yesterday HUI quickly fell sharply, see http://finance.yahoo.com/q/ta?t=5d&s=%5EGSPC&l=off&z=l&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=%5Ehui. Also notice that, even when SPX was trending up, when it briefly declined intraday HUI plunged. What will happen when SPX falls sharply? HUI/XAU are likely to decline dramatically.
The US Dollar closed near it's session cycle high yesterday at 83.75ish, up +0.40. Severe weakness may occur on Monday for HUI/NEM/XAU.
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.
The XAU has downside gaps at 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.
NEM clearly broke it's minor intermediate term upcycle trendline since 10-4-06 on Tuesday, so, the vicious decline may soon rear it's head in a big way.
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
Yesterday reliable lead indicator NEM appears to have completed a very short term Wave B test (cycle high at 47.77 yesterday) of 12-8's likely minor intermediate term cycle high at 47.80. If so then NEM should be about to plunge and HUI/XAU with it.
The XAU Put/Call Ratio for the January expiration, at 0.63657, is dramatically lower than the final December XAU Put/Call Ratio at 0.99706, which reflects a high level of complacency among XAU traders that's a major negative.
XAU Implied Volatility has been declining since the XAU put in a minor intermediate term cycle high on 12-5, which is a very bearish sign because it's a major rise in complacency that portends substantial weakness. One wants to see fear come in via a sharply rising XAU Implied Volatility when the XAU falls sharply. Here's the data since 12-5, with weakness meaning that the sum of the daily % change in XAU/XAU Implied Volatility was negative (a decline in the XAU wall of worry which is a rise in complacency): 28.240 on 12-15 weakness, 28.895 on 12-14 weakness, 30.175 on 12-13 weakness, 31.010 on 12-12 weakness, 31.035 on 12-11 strength, 30.690 on 12-8 weakness, 30.385 on 12-7 weakness, 31.285 on 12-6 weakness, 31.230 on 12-5 weakness.
XAU Implied Volatility points to potential severe weakness on Monday, since it fell -2.27% to 28.240 on 12-15 from 28.895 on 12-14 versus a -1.30% decline in the XAU, which is a very sharp (3-6%) +3.57% rise in complacency (-2.27% + -1.30% = -3.57% decline in the XAU wall of worry = +3.57% rise in complacency)
HUI/XAU were in an intraday Elliott Wave 12345 upcycle towards session's end yesterday and "need to do" the third/Wave 5 upcycle, so, it looks like they will experience brief strength on Monday followed by a potentially sharp drop, because SPX appears to be in a short term and possibly also an important minor intermediate term downcycle since early Friday, see http://finance.yahoo.com/q/ta?t=5d&s=%5EGSPC&l=off&z=l&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=%5Ehui.
Notice in the 5 day SPX (S & P 500) chart versus HUI at the link below that SPX held HUI together much of this week due to index fund program buying. Once SPX began a modest downtrend yesterday HUI quickly fell sharply, see http://finance.yahoo.com/q/ta?t=5d&s=%5EGSPC&l=off&z=l&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=%5Ehui. Also notice that, even when SPX was trending up, when it briefly declined intraday HUI plunged. What will happen when SPX falls sharply? HUI/XAU are likely to decline dramatically.
The US Dollar closed near it's session cycle high yesterday at 83.75ish, up +0.40. Severe weakness may occur on Monday for HUI/NEM/XAU.
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.
The XAU has downside gaps at 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.
NEM clearly broke it's minor intermediate term upcycle trendline since 10-4-06 on Tuesday, so, the vicious decline may soon rear it's head in a big way.
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
9:45 AM
