Zero Fed Credit Today For Index Fund Program Traders
The Fed decided to be party poopers today and didn't provide any credit, unless they do it later than they normally do, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE. The short term upcycle/spike move since late last Wednesday, 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==, appears to have ended. It was largely fueled by massive Fed Credit ($20.75 Billion last Thursday) and much of the gains occurred in the first two hours of Thursday's session.
Index fund program trading accounts for about 45% of the trading volume on the NYSE, see http://www.programtrading.com/faq.htm. The S & P 500 (SPX) is the primary index used by program traders, so it tends to lead the indexes it affects like HUI/XAU. The effect that SPX has on many other indexes short term tends to be huge thanks to program trading.
In chart one at http://www.joefrocks.com/GoldStockCharts.html one can see that SPX drives HUI's short term cycles. It triggered HUI/XAU's latest vicious decline from early September until October 4, and, the worst part by far of that huge decline was driven by significant SPX weakness (see chart one at link above). Also, a substantial SPX correction coincided closely with HUI/XAU's vicious decline from May 11 until June 13, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=2y&l=off&z=l&q=c&p=&a=m26-12-9,m26-12-9,p12,m26-12-9,p12,fs,m26-12-9,p12,fs,w14&c=%5EGSPC.
In chart one at http://www.joefrocks.com/GoldStockCharts.html one can see that the significant SPX decline that occurred on Monday 11-27, one of SPX's worst sessions in recent weeks/months, should soon "filter it's way" into HUI/XAU and result in a very sharp/substantial decline, that may be the start of the vicious decline that HUI/XAU's cycles indicate should occur, because, they should decline to their primary Secular Bull Market/very long term upcycle trendlines (in effect since late 2000) if they're in a Wave 2 Cyclical Bear Market (since 5-11-06, see charts 5 and 7 at http://www.joefrocks.com/GoldStockCharts.html), just as reliable lead indicator NEM did when it hit a likely Wave 2 Cyclical Bear Market (began 1-31-06 and ended 10-4-06) cycle low at 39.84 on 10-4-06, see chart six at http://www.joefrocks.com/GoldStockCharts.html.
HUI/NEM/XAU may have hit minor intermediate term cycle highs today for the cycle that began on 10-4-06, which means that the expected vicious decline for HUI/XAU may have begun.
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 35-45%+ 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 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
Index fund program trading accounts for about 45% of the trading volume on the NYSE, see http://www.programtrading.com/faq.htm. The S & P 500 (SPX) is the primary index used by program traders, so it tends to lead the indexes it affects like HUI/XAU. The effect that SPX has on many other indexes short term tends to be huge thanks to program trading.
In chart one at http://www.joefrocks.com/GoldStockCharts.html one can see that SPX drives HUI's short term cycles. It triggered HUI/XAU's latest vicious decline from early September until October 4, and, the worst part by far of that huge decline was driven by significant SPX weakness (see chart one at link above). Also, a substantial SPX correction coincided closely with HUI/XAU's vicious decline from May 11 until June 13, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=2y&l=off&z=l&q=c&p=&a=m26-12-9,m26-12-9,p12,m26-12-9,p12,fs,m26-12-9,p12,fs,w14&c=%5EGSPC.
In chart one at http://www.joefrocks.com/GoldStockCharts.html one can see that the significant SPX decline that occurred on Monday 11-27, one of SPX's worst sessions in recent weeks/months, should soon "filter it's way" into HUI/XAU and result in a very sharp/substantial decline, that may be the start of the vicious decline that HUI/XAU's cycles indicate should occur, because, they should decline to their primary Secular Bull Market/very long term upcycle trendlines (in effect since late 2000) if they're in a Wave 2 Cyclical Bear Market (since 5-11-06, see charts 5 and 7 at http://www.joefrocks.com/GoldStockCharts.html), just as reliable lead indicator NEM did when it hit a likely Wave 2 Cyclical Bear Market (began 1-31-06 and ended 10-4-06) cycle low at 39.84 on 10-4-06, see chart six at http://www.joefrocks.com/GoldStockCharts.html.
HUI/NEM/XAU may have hit minor intermediate term cycle highs today for the cycle that began on 10-4-06, which means that the expected vicious decline for HUI/XAU may have begun.
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 35-45%+ 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 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
7:31 AM
