Reliable Lead Indicator NEM's Extremely Flat Downtrend
Reliable lead indicator NEM has an extremely flat downtrend since hitting a minor intermediate term (cycle began 10-4-06) cycle high at 47.60 early on Tuesday, with yesterday's cycle high at 47.56 and today's at 47.55 only slightly lower than Tuesday's. HUI/XAU's downtrend since hitting a minor intermediate term (cycle since 10-4-06) cycle high early on Tuesday is much steeper, which jives with NEM hitting a very important cycle low at 39.84 on 10-4-06 and entering a five yearish Wave 3 Cyclical Bull Market, but, HUI/XAU are likely to experience a vicious 35-45% decline in the next 3-6 weeks, which is a final Wave C of Wave C of the Wave 2 Cyclical Bear Market since 5-11-06.
HUI/NEM/XAU completed a very sharp Elliott Wave ABC down up down downcycle early today (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==), so, the sharp rebound was no surprise, with the usual Thursday Fed punch spiking ($13.75 Billion) providing a major assist. After completing an Elliott Wave 12345 up down up down up upcycle during midsession, HUI/NEM/XAU did a Wave A down followed by a Wave B up and were early in a Wave C down at session's end, so, early weakness is likely again tomorrow, which jives with lead indicator (lead index used by program traders) SPX (S & P 500) weakness late in the session.
Program trading accounts for 45% of the daily trading volume on the NYSE, which probably means that it accounts for 60-70% or more of the Dollar Volume on the NYSE. Program trading is obviously a huge short/intermediate term factor for most if not all sectors.
The XAU filled it's downside gap at 144.09 early today, the remaining gaps are 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. So, watch the downside gaps at 141.59 for the XAU and at 44.88 for NEM tomorrow.
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.
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.
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
HUI/NEM/XAU completed a very sharp Elliott Wave ABC down up down downcycle early today (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==), so, the sharp rebound was no surprise, with the usual Thursday Fed punch spiking ($13.75 Billion) providing a major assist. After completing an Elliott Wave 12345 up down up down up upcycle during midsession, HUI/NEM/XAU did a Wave A down followed by a Wave B up and were early in a Wave C down at session's end, so, early weakness is likely again tomorrow, which jives with lead indicator (lead index used by program traders) SPX (S & P 500) weakness late in the session.
Program trading accounts for 45% of the daily trading volume on the NYSE, which probably means that it accounts for 60-70% or more of the Dollar Volume on the NYSE. Program trading is obviously a huge short/intermediate term factor for most if not all sectors.
The XAU filled it's downside gap at 144.09 early today, the remaining gaps are 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. So, watch the downside gaps at 141.59 for the XAU and at 44.88 for NEM tomorrow.
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.
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.
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
1:15 PM
