HUI/XAU's Very Short Term Wave B May Have Peaked Late Today

HUI/XAU's very short term Wave B upcycle since late Monday may have peaked late 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==. The Fed provided a massive $13 Billion 1 day Repo today that led to a sharp spike early on, after which the uptrend rolled over dramatically/was very flat. Most of today's strength occurred in the first hour or less.

NEM's Wave B of it's minor intermediate term downcycle since 12-8-06 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) appears to/may have peaked in dramatic rollover mode early today at 45.50, versus early last Thursday's cycle high at 45.03.

The NEM Lead Indicator was a bearish -0.59% versus the XAU today, and, the WMT Lead Indicator was a modestly bullish +0.21% versus the S & P 500 (SPX) today, but, turned bearish in the second half of the session, see http://finance.yahoo.com/q/ta?t=1d&s=%5EHUI&l=off&z=l&q=l&a=m26-12-9&a=p12&a=fs&a=w14&c=wmt%2Cnem&c=%5EGSPC. One can see in that chart that HUI followed (to a large extent) SPX due to program trading.

The correct strategy now is to wait for HUI/XAU (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==) to do a very short term Wave A down (uptrend since late Monday should clearly break down), then look to short some stock and/or buy puts in a significant rebound/very short term Wave B, if that's what you're looking to do.

Lycos Thomson I Watch showed some strong sell interest today for NEM (largest component of HUI), GFI (second largest component of HUI the last I checked), and WMT (reliable lead indicator for SPX), see http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=nem, http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=gfi, http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=wmt.

Today's (or tomorrow's) cycle high for HUI/XAU is/will be a very short term Wave B/countertrend cycle high of the final Wave C decline (began early last Thursday) of their Cyclical Bear Market since 5-11-06, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html.

The XAU has downside gaps at 136.10 and 132.09, and, NEM has downside gaps at 43.88, 43.06, 41.83, 41.09, and at 40.83.

The process in which NEM dramatically outperforms HUI/XAU (will portend a 5+ year Wave 3 Cyclical Bull Market for HUI/XAU) appears to have begun. It's great news that reliable lead indicator NEM is acting like it entered a 5+ year Wave 3 Cyclical Bull Market on 10-4-06, with a cycle low at 39.84 at it's primary multi year trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html.

Since NEM hit it's Secular Bull Market primary trendline on 10-4-06 (cycle low at 39.84, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html), while HUI/XAU are in the final Wave C decline of the Cyclical Bear Market since 5-11-06 (see charts 2, 3, 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html), NEM should dramatically outperform HUI/XAU the next few weeks, and, intraday changes in the NEM lead Indicator have become more important in assessing it's indications.

HUI/XAU are probably in the final Wave C decline of the Cyclical Bear Market since 5-11-06, the extremely bearish COT data (http://tradethecycles.blogspot.com/2007/01/savvy-non-contrarian-gold-commercial.html), the fact that the Fed has pulled the plug on index fund program traders recently (In the most recent week ending 1-24-07, the largest weekly drop I remember seeing, a -$8.944 Billion decline in Fed credit, see http://www.federalreserve.gov/releases/h41/Current/), the XAU Put/Call Ratio and XAU Implied Volatility have been collapsing, and, the bearish NEM and WMT Lead Indicators at -1.83% versus the XAU and -0.73% versus the S & P 500 (SPX) last week, I'm expecting the bottom to fall out of HUI/XAU soon.

The XAU Put/Call Ratio (February expiration) continues to dramatically collapse (collapsed to 0.89941 yesterday/on 1-30 from 0.92554 on 1-29 from 0.92800 on 1-26 from 0.98095 on 1-25 from 0.99928 on 1-24 from 1.05875 on 1-23 from 1.09239 on 1-22), which is a very bearish sign that indicates XAU options traders don't understand what's going on/are far too bullish/complacent.

The Elliott Wave count for HUI/XAU is probably (very likely) Wave C, not Wave C of Wave A. Revising it doesn't make much difference concerning what's expected to happen, except that it implies that HUI is about to fall 35-41% from Thursday's countertrend Wave B cycle high to 200-220 (primary multi year Secular Bull Market trendline, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html) in the next few weeks, while NEM's cycle low at 39.84 from 10-4-06 should hold, because NEM reached it's primary multi year Secular Bull Market trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html.

How does HUI fall 35-41% (XAU 30-35%) the next few weeks while NEM only falls 10-11%? The answer probably is that Wave C will also do an Elliott Wave ABC down up down pattern, as Wave A just did (from 12-5-06 until 1-10-07, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=6m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=), and, NEM has to dramatically outperform HUI/XAU the next few weeks during Wave C, just as NEM dramatically underperformed HUI/XAU since it's Wave 1 Cyclical Bull Market cycle high on 1-31-06. Also, NEM's bottom/minor intermediate term cycle low will probably correspond with HUI/XAU's Wave A of Wave C cycle low.

NEM's primary multi year Secular Bull market trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, should hold, and, HUI/XAU should decline to their primary multi year Secular Bull market trendlines, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. The final Wave C decline of HUI/XAU's Wave 2 Cyclical Bear Market probably began early on 1-25.

Program selling due to SPX (S & P 500) weakness will probably play a huge part in the process of driving HUI/XAU down to their primary trendlines. Notice in the 2 year chart of HUI versus SPX (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) how SPX weakness in the Spring of 2005 and 2006 as well as September 2005 coincided with substantial/vicious HUI declines, and, though it isn't obvious in the 2 year chart, the worst part by far of HUI/XAU's vicious downcycle from early September 2006 until 10-4-06 coincided with significant SPX weakness (you can click on the 6 month link in the chart at the link above to see that much better).

The expected upside gap filling scenario discussed on 1-16-07 ("HUI/NEM/XAU began a short term upcycle early last Wednesday, in which they should fill upside gaps at 43.65 and 44 for NEM, and, at 136.95 for the XAU.") and shown in chart 1 at http://www.joefrocks.com/GoldStockCharts.html has occurred, and indicates that HUI/XAU's Wave B probably peaked early on 1-25. Often, important cycle highs/lows will occur shortly after gap filling action is completed. That's why cycle trendlines/channels in concert with Elliott Wave patterns and gaps form the basis/crux of "Trade the Cycles."

HUI/XAU probably entered a vicious Wave C decline (a few weeks) early on 1-25, in which HUI/XAU's Cyclical Bear Market since 5-11-06 (see charts 2, 3, 6, 7, and 9 at http://www.joefrocks.com/GoldStockCharts.html), and, Wave C of NEM's minor intermediate term downcycle since 12-8-06 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html), should bottom.

NEM's cycle low from 10-4-06 at 39.84 should hold, because NEM hit it's primary Secular Bull Market trendline since October 2000, and, hit a major 5% follow through buy signal, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html. Reliable lead indicator NEM should be in a 5+ year Wave 3 Cyclical Bull Market since 10-4-06's cycle low at 39.84. HUI/XAU are in a Wave 2 Cyclical Bear Market since 5-11-06 (have yet to reach their primary trendlines as discussed in subsequent paragraphs).

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. 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 7 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 7, 8, and 9 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 7 and 9 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 two and three 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 8 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 $470ish right now, so, gold would be a great buy in the $470-500 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 7 and 9 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 8 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .

HUI NEM XAU

.......NEM's Wave B Is Peaking In Rollover Mode

NEM took out last Thursday's cycle high (45.03) early today, with a cycle high so far at 45.34, that appears to be the final Wave B cycle high. Wave B of NEM's minor intermediate term downcycle since 12-8-06 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) is peaking in dramatic rollover mode, while HUI/XAU's Wave B of their major downcycle since 12-5-06 (see charts 2 and 3 at http://www.joefrocks.com/GoldStockCharts.html) peaked early last 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==.

Today's cycle high for HUI/XAU is/will be a very short term Wave B/countertrend cycle high of the final Wave C decline (began early last Thursday) of their Cyclical Bear Market since 5-11-06, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html.

The process in which NEM dramatically outperforms HUI/XAU (will portend a 5+ year Wave 3 Cyclical Bull Market for HUI/XAU) appears to have begun. It's great news that reliable lead indicator NEM is acting like it entered a 5+ year Wave 3 Cyclical Bull Market on 10-4-06, with a cycle low at 39.84 at it's primary multi year trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html.

Even though my Elliott Wave count from yesterday was a little off (not by much, today's early HUI/NEM/XAU strength is the brief Wave 5 spike for the very short term upcycle that began late on Monday, 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==), it still probably very closely nailed the peak timewise and isn't a big miss pricewise either. It makes sense to sell a bit early (sell strength), because Wave 5 spikes tend to be brief and often sharp declines occur right after Wave 5 spikes. The larger the spike the greater the ensuing decline tends to be, in order to correct that spike.

Since NEM hit it's Secular Bull Market primary trendline on 10-4-06 (cycle low at 39.84, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html), while HUI/XAU are in the final Wave C decline of the Cyclical Bear Market since 5-11-06 (see charts 2, 3, 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html), NEM should dramatically outperform HUI/XAU the next few weeks, and, intraday changes in the NEM lead Indicator have become more important in assessing it's indications.

My strategy now is to wait for NEM to do an intraday/very short term Wave A down (wait for the current rally/very short term upcycle since late Monday to clearly break down), then during the very short term Wave B up I'll look to short some stock and buy XAU puts.

HUI/XAU are probably in the final Wave C decline of the Cyclical Bear Market since 5-11-06, the extremely bearish COT data (http://tradethecycles.blogspot.com/2007/01/savvy-non-contrarian-gold-commercial.html), the fact that the Fed has pulled the plug on index fund program traders recently (In the most recent week ending 1-24-07, the largest weekly drop I remember seeing, a -$8.944 Billion decline in Fed credit, see http://www.federalreserve.gov/releases/h41/Current/), the XAU Put/Call Ratio and XAU Implied Volatility have been collapsing, and, the bearish NEM and WMT Lead Indicators at -1.83% versus the XAU and -0.73% versus the S & P 500 (SPX) last week, I'm expecting the bottom to fall out of HUI/XAU soon.

The XAU Put/Call Ratio (February expiration) continues to dramatically collapse (collapsed to 0.89941 yesterday/on 1-30 from 0.92554 on 1-29 from 0.92800 on 1-26 from 0.98095 on 1-25 from 0.99928 on 1-24 from 1.05875 on 1-23 from 1.09239 on 1-22), which is a very bearish sign that indicates XAU options traders don't understand what's going on/are far too bullish/complacent.

The Elliott Wave count for HUI/XAU is probably (very likely) Wave C, not Wave C of Wave A. Revising it doesn't make much difference concerning what's expected to happen, except that it implies that HUI is about to fall 35-41% from Thursday's countertrend Wave B cycle high to 200-220 (primary multi year Secular Bull Market trendline, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html) in the next few weeks, while NEM's cycle low at 39.84 from 10-4-06 should hold, because NEM reached it's primary multi year Secular Bull Market trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html.

How does HUI fall 35-41% (XAU 30-35%) the next few weeks while NEM only falls 10-11%? The answer probably is that Wave C will also do an Elliott Wave ABC down up down pattern, as Wave A just did (from 12-5-06 until 1-10-07, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=6m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=), and, NEM has to dramatically outperform HUI/XAU the next few weeks during Wave C, just as NEM dramatically underperformed HUI/XAU since it's Wave 1 Cyclical Bull Market cycle high on 1-31-06. Also, NEM's bottom/minor intermediate term cycle low will probably correspond with HUI/XAU's Wave A of Wave C cycle low.

NEM's primary multi year Secular Bull market trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, should hold, and, HUI/XAU should decline to their primary multi year Secular Bull market trendlines, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. The final Wave C decline of HUI/XAU's Wave 2 Cyclical Bear Market probably began early on 1-25.

Program selling due to SPX (S & P 500) weakness will probably play a huge part in the process of driving HUI/XAU down to their primary trendlines. Notice in the 2 year chart of HUI versus SPX (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) how SPX weakness in the Spring of 2005 and 2006 as well as September 2005 coincided with substantial/vicious HUI declines, and, though it isn't obvious in the 2 year chart, the worst part by far of HUI/XAU's vicious downcycle from early September 2006 until 10-4-06 coincided with significant SPX weakness (you can click on the 6 month link in the chart at the link above to see that much better).

The expected upside gap filling scenario discussed on 1-16-07 ("HUI/NEM/XAU began a short term upcycle early last Wednesday, in which they should fill upside gaps at 43.65 and 44 for NEM, and, at 136.95 for the XAU.") and shown in chart 1 at http://www.joefrocks.com/GoldStockCharts.html has occurred, and indicates that HUI/XAU's Wave B probably peaked early on 1-25. Often, important cycle highs/lows will occur shortly after gap filling action is completed. That's why cycle trendlines/channels in concert with Elliott Wave patterns and gaps form the basis/crux of "Trade the Cycles."

The XAU has downside gaps at 136.10 and 132.09, and, NEM has downside gaps at 43.88, 43.06, 41.83, 41.09, and at 40.83.

HUI/NEM/XAU probably entered a vicious Wave C decline (a few weeks) early on 1-25, in which HUI/XAU's Cyclical Bear Market since 5-11-06 (see charts 2, 3, 6, 7, and 9 at http://www.joefrocks.com/GoldStockCharts.html), and, Wave C of NEM's minor intermediate term downcycle since 12-8-06 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html), should bottom.

NEM's cycle low from 10-4-06 at 39.84 should hold, because NEM hit it's primary Secular Bull Market trendline since October 2000, and, hit a major 5% follow through buy signal, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html. Reliable lead indicator NEM should be in a 5+ year Wave 3 Cyclical Bull Market since 10-4-06's cycle low at 39.84. HUI/XAU are in a Wave 2 Cyclical Bear Market since 5-11-06 (have yet to reach their primary trendlines as discussed in subsequent paragraphs).

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. 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 7 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 7, 8, and 9 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 7 and 9 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 two and three 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 8 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 $470ish right now, so, gold would be a great buy in the $470-500 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 7 and 9 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 8 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .

HUI NEM XAU

The NEM Lead Indicator Turned Bearish Late In The Session

The NEM Lead Indicator turned bearish late in the session today (gap versus the XAU narrowed), see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem. So, early weakness is likely tomorrow.

Since NEM hit it's Secular Bull Market primary trendline on 10-4-06 (cycle low at 39.84, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html), while HUI/XAU are in the final Wave C decline of the Cyclical Bear Market since 5-11-06 (see charts 2, 3, 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html), NEM should dramatically outperform HUI/XAU the next few weeks, and, intraday changes in the NEM lead Indicator have become more important in assessing it's indications.

In the second half of today's session the NEM Lead Indicator was (approximately) a bearish -0.50% versus the XAU (narrowed by about -0.50%). The Walmart Lead Indicator was an extremely bearish -1.32% versus SPX (S & P 500) today, so, the lead indicators strongly point to weakness early tomorrow, as does Elliott Wave.

HUI/NEM/XAU all did Elliott Wave 12345 up down up down up patterns in their very short term Wave B up that began late yesterday, 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==. Wave 1 peaked about a half hour into the session, Wave 3 about 1.5 hours into the session, and, Wave 5 peaked in dramatic rollover mode (NEM wasn't nearly as flat as HUI/XAU) about an hour before session's end, so, I'll be looking to get my shorts on in the first hour of trading tomorrow.

Today's first post is at http://tradethecycles.blogspot.com/2007/01/huinemxau-elliott-wave-count.html.

I neglected to mention in today's first post that NEM created a downside gap at today's open at 43.88 and the XAU did so at 136.10. Those downside gaps should get filled this week.

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 8 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 $470ish right now, so, gold would be a great buy in the $470-500 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 7 and 9 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 8 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .

HUI NEM XAU

...........Gold Writers Continue To Drink KoolAid

Mark Hulbert reveals that complacency is running amuck amongst the generally clueless gold writers:

"Nevertheless, gold timers have so quickly jumped on the bullish bandwagon in recent weeks that contrarians are beginning to wonder about their forecast for the entire year.

Consider the Hulbert Gold Newsletter Sentiment Index (HGNSI), which reflects the average recommended gold market exposure among a subset of short-term gold timing newsletters tracked by the Hulbert Financial Digest. As of Monday night, the HGNSI stood at 67.9%. This is too high, no matter how you look at it.

For example, the HGNSI stood at 25% as of my Dec. 27 column. So, the editor of the average gold timing newsletter has become more than twice as bullish in the course of a month.

The high level of current bullishness is also evident in what happened to the HGNSI on Monday. Even though gold bullion fell during the day's trading session, the average gold timer became significantly more bullish. For the day, the HGNSI jumped more than 14 percentage points.

These developments are worrisome, according to contrarian analysis, because the markets rarely behave in the ways that the majority expects them to. Contrarians would be far more comfortable in forecasting a strong gold market if the gold timers on balance weren't so exuberant. "

For the complete article see http://www.marketwatch.com/news/story/contrarians-worry-because-gold-timers-too/story.aspx?guid=%7BD59E07D5%2D9225%2D41BE%2DA4F4%2D345F95920D9B%7D.

I neglected to mention in today's first post (see next link) that NEM created a downside gap at today's open at 43.88 and the XAU did so at 136.10. Those downside gaps should get filled this week.

For the previous post see http://tradethecycles.blogspot.com/2007/01/huinemxau-elliott-wave-count.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 8 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 $470ish right now, so, gold would be a great buy in the $470-500 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 7 and 9 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 8 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .

HUI NEM XAU

...............HUI/NEM/XAU Elliott Wave Count

HUI/NEM/XAU's Elliott Wave count is as follows: A Wave B short term cycle high occurred early last Thursday (for HUI/XAU's major downcycle since 12-5-06, see charts 2 and 3 at http://www.joefrocks.com/GoldStockCharts.html) and a severe (HUI fell -4.62%) 2 day/very short term Wave A down bottomed late yesterday (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, a very short term Wave B up began late yesterday that will probably be/appears anemic/short lived.

The XAU Put/Call Ratio (February expiration) continues to collapse, falling sharply to 0.89941 today/on 1-30 from 0.92554 yesterday/1-29. The Fed has removed the punch bowl the past few weeks (see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE) after having massively spiked the punch for a few weeks. They added a relatively modest $3.75 Billion Repo today. Their fear of the economic hard landing has subsided for now, and, the prior massive punch spiking didn't help the S & P 500 (SPX) that much, because it was rolling over.

It looks like today will probably be the day when I short some stock (probably the GDX ETF) and buy some XAU puts. HUI/XAU are probably in the final Wave C decline of the Cyclical Bear Market since 5-11-06, the extremely bearish COT data (http://tradethecycles.blogspot.com/2007/01/savvy-non-contrarian-gold-commercial.html), the fact that the Fed has pulled the plug on index fund program traders recently (In the most recent week ending 1-24-07, the largest weekly drop I remember seeing, a -$8.944 Billion decline in Fed credit, see http://www.federalreserve.gov/releases/h41/Current/), the XAU Put/Call Ratio and XAU Implied Volatility have been collapsing, and, the bearish NEM and WMT Lead Indicators at -1.83% versus the XAU and -0.73% versus the S & P 500 (SPX) last week, I'm expecting the bottom to fall out of HUI/XAU soon.

The XAU Put/Call Ratio (February expiration) continues to dramatically collapse (collapsed to 0.89941 today/on 1-30 from 0.92554 on 1-29 from 0.92800 on 1-26 from 0.98095 on 1-25 from 0.99928 on 1-24 from 1.05875 on 1-23 from 1.09239 on 1-22), which is a very bearish sign that indicates XAU options traders don't understand what's going on/are far too bullish/complacent.

The Elliott Wave count for HUI/XAU is probably (very likely) Wave C, not Wave C of Wave A. Revising it doesn't make much difference concerning what's expected to happen, except that it implies that HUI is about to fall 35-41% from Thursday's countertrend Wave B cycle high to 200-220 (primary multi year Secular Bull Market trendline, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html) in the next few weeks, while NEM's cycle low at 39.84 from 10-4-06 should hold, because NEM reached it's primary multi year Secular Bull Market trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html.

How does HUI fall 35-41% (XAU 30-35%) the next few weeks while NEM only falls 10-11%? The answer probably is that Wave C will also do an Elliott Wave ABC down up down pattern, as Wave A just did (from 12-5-06 until 1-10-07, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=6m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=), and, NEM has to dramatically outperform HUI/XAU the next few weeks during Wave C, just as NEM dramatically underperformed HUI/XAU since it's Wave 1 Cyclical Bull Market cycle high on 1-31-06. Also, NEM's bottom/minor intermediate term cycle low will probably correspond with HUI/XAU's Wave A of Wave C cycle low.

NEM's primary multi year Secular Bull market trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, should hold, and, HUI/XAU should decline to their primary multi year Secular Bull market trendlines, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. The final Wave C decline of HUI/XAU's Wave 2 Cyclical Bear Market probably began early on 1-25.

Program selling due to SPX (S & P 500) weakness will probably play a huge part in the process of driving HUI/XAU down to their primary trendlines. Notice in the 2 year chart of HUI versus SPX (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) how SPX weakness in the Spring of 2005 and 2006 as well as September 2005 coincided with substantial/vicious HUI declines, and, though it isn't obvious in the 2 year chart, the worst part by far of HUI/XAU's vicious downcycle from early September 2006 until 10-4-06 coincided with significant SPX weakness (you can click on the 6 month link in the chart at the link above to see that much better).

The expected upside gap filling scenario discussed on 1-16-07 ("HUI/NEM/XAU began a short term upcycle early last Wednesday, in which they should fill upside gaps at 43.65 and 44 for NEM, and, at 136.95 for the XAU.") and shown in chart 1 at http://www.joefrocks.com/GoldStockCharts.html has occurred, and indicates that HUI/NEM/XAU's Wave B probably peaked early on 1-25. Often, important cycle highs/lows will occur shortly after gap filling action is completed. That's why cycle trendlines/channels in concert with Elliott Wave patterns and gaps form the basis/crux of "Trade the Cycles."

The XAU has a downside gap from Tuesday 1-26's open at 132.09 and NEM has a downside gap from Tuesday 1-26's open at 43.06, in addition to downside gaps at 41.83, 41.09, and at 40.83.

The Fed took their foot off the pedal the past ten days(http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE), with the exception of Thursday's massive $15.50 Billion, the past 3 days were modest/average ($3.75 Billion, $5.25 Billion and $6 Billion), a modest $4.00 Billion Wednesday 1-24, $3.50 Billion on Tuesday 1-23, $2.00 Billion and $1.75 Billion on Friday 1-19 and Wednesday 1-17, versus an average of $5-6 Billion/day, and, Thursday 1-18's $11 Billion in Repos, while large, is below the typical $13-14 Billion on punch spiking Thursday (much more on recent Thursdays). Monday 1-22's was a relatively average $5.75 Billion in credit.

Going abruptly from massive punch spiking to effectively removing the punch bowl could lead to a vicious decline soon (probably began early on 1-25), due to index fund program selling and a much lower level of program buying (program trading accounts for about 70% of the dollar volume on the NYSE).

HUI/NEM/XAU probably entered a vicious Wave C decline (a few weeks) early on 1-25, in which HUI/XAU's Cyclical Bear Market since 5-11-06 (see charts 2, 3, 6, 7, and 9 at http://www.joefrocks.com/GoldStockCharts.html), and, Wave C of NEM's minor intermediate term downcycle since 12-8-06 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html), should bottom.

NEM's cycle low from 10-4-06 at 39.84 should hold, because NEM hit it's primary Secular Bull Market trendline since October 2000, and, hit a major 5% follow through buy signal, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html. Reliable lead indicator NEM should be in a 5+ year Wave 3 Cyclical Bull Market since 10-4-06's cycle low at 39.84. HUI/XAU are in a Wave 2 Cyclical Bear Market since 5-11-06 (have yet to reach their primary trendlines as discussed in subsequent paragraphs).

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. 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 7 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 7, 8, and 9 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 7 and 9 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 two and three 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 8 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 $470ish right now, so, gold would be a great buy in the $470-500 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 7 and 9 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 8 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .

HUI NEM XAU

The NEM Lead Indicator Was A Very Bullish +0.98% Versus The XAU Today

The NEM Lead Indicator was a very bullish +0.98% versus the XAU today, the WMT Lead Indicator was a slightly bullish +0.03% versus the S & P 500 (SPX) today, and, HUI/NEM/XAU have done an Elliott Wave down up down pattern since early last Thursday's Wave B cycle high, so, it didn't make sense to get my shorts on today, since there wasn't enough of a rebound (or negative lead indicators) such that it would make sense, 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==.

In the next day or two HUI/NEM/XAU should do a very short term Elliott Wave 12345 up down up down up pattern (maybe a respectable very short term Wave B as opposed to the anemic very short term one that peaked early today), and, the NEM and WMT lead indicators should turn bearish. If so, I'll be looking to get my shorts on.

Based upon HUI/XAU probably being in the final Wave C decline of the Cyclical Bear Market since 5-11-06, the extremely bearish COT data (http://tradethecycles.blogspot.com/2007/01/savvy-non-contrarian-gold-commercial.html), the fact that the Fed has pulled the plug on index fund program traders recently (In the most recent week ending 1-24-07, the largest weekly drop I remember seeing, a -$8.944 Billion decline in Fed credit, see http://www.federalreserve.gov/releases/h41/Current/), the XAU Put/Call Ratio and XAU Implied Volatility have been collapsing, and, the bearish NEM and WMT Lead Indicators at -1.83% versus the XAU and -0.73% versus the S & P 500 (SPX) last week, I'm expecting the bottom to fall out of HUI/XAU soon.

The previous post is at http://tradethecycles.blogspot.com/2007/01/huinemxau-very-short-term-wave-b.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 8 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 $470ish right now, so, gold would be a great buy in the $470-500 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 7 and 9 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 8 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .

HUI NEM XAU

HUI/NEM/XAU Very Short Term Wave B Rebound Is Peaking

HUI/NEM/XAU's very short term Wave B upcycle (since entering the final Wave C decline of HUI/XAU's Cyclical Bear Market since 5-11-06 early on Thursday) may have peaked early today. NEM had a respectable rebound (44.75 cycle high early today versus a little above 45 early last Thursday) while HUI/XAU's was anemic (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=), which is obviously a bad sign.

Based upon HUI/XAU probably being in the final Wave C decline of the Cyclical Bear Market since 5-11-06, the extremely bearish COT data (http://tradethecycles.blogspot.com/2007/01/savvy-non-contrarian-gold-commercial.html), the fact that the Fed has pulled the plug on index fund program traders recently (In the most recent week ending 1-24-07, the largest weekly drop I remember seeing, a -$8.944 Billion decline in Fed credit, see http://www.federalreserve.gov/releases/h41/Current/), the XAU Put/Call Ratio and XAU Implied Volatility have been collapsing, and, the bearish NEM and WMT Lead Indicators at -1.83% versus the XAU and -0.73% versus the S & P 500 (SPX) last week, I'm expecting the bottom to fall out of HUI/XAU soon.

The severe very short term Wave A down following the Wave B cycle high early last Thursday (at 340.09 (HUI), a severe Wave A very short term downcycle occurred, with HUI falling -3.76% to 327.31) plus the anemic very short term Wave B up are additional bearish signs for HUI/XAU.

The XAU Put/Call Ratio (February expiration) continues to dramatically collapse (collapsed to 0.92554 today/on 1-29 from 0.92800 on 1-26 from 0.98095 on 1-25 from 0.99928 on 1-24 from 1.05875 on 1-23 from 1.09239 on 1-22), which is a very bearish sign that indicates XAU options traders don't understand what's going on/are far too bullish/complacent. XAU Implied Volatility also collapsed recently to 27.235 on 1-26 from 31.470 on 1-17.

The Elliott Wave count for HUI/XAU is probably (very likely) Wave C, not Wave C of Wave A. Revising it doesn't make much difference concerning what's expected to happen, except that it implies that HUI is about to fall 35-41% from yesterday's countertrend Wave B cycle high to 200-220 (primary multi year Secular Bull Market trendline, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html) in the next few weeks, while NEM's cycle low at 39.84 from 10-4-06 should hold, because NEM reached it's primary multi year Secular Bull Market trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html.

How does HUI fall 35-41% (XAU 30-35%) the next few weeks while NEM only falls 10-11%? The answer probably is that Wave C will also do an Elliott Wave ABC down up down pattern, as Wave A just did (from 12-5-06 until 1-10-07, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=6m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=), and, NEM has to dramatically outperform HUI/XAU the next few weeks during Wave C, just as NEM dramatically underperformed HUI/XAU since it's Wave 1 Cyclical Bull Market cycle high on 1-31-06. Also, NEM's bottom/minor intermediate term cycle low will probably correspond with HUI/XAU's Wave A of Wave C cycle low.

NEM's primary multi year Secular Bull market trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, should hold, and, HUI/XAU should decline to their primary multi year Secular Bull market trendlines, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. The final Wave C decline of HUI/XAU's Wave 2 Cyclical Bear Market probably began early yesterday/1-25.

Program selling due to SPX (S & P 500) weakness will probably play a huge part in the process of driving HUI/XAU down to their primary trendlines. Notice in the 2 year chart of HUI versus SPX (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) how SPX weakness in the Spring of 2005 and 2006 as well as September 2005 coincided with substantial/vicious HUI declines, and, though it isn't obvious in the 2 year chart, the worst part by far of HUI/XAU's vicious downcycle from early September 2006 until 10-4-06 coincided with significant SPX weakness (you can click on the 6 month link in the chart at the link above to see that much better).

The expected upside gap filling scenario discussed on 1-16-07 ("HUI/NEM/XAU began a short term upcycle early last Wednesday, in which they should fill upside gaps at 43.65 and 44 for NEM, and, at 136.95 for the XAU.") and shown in chart 1 at http://www.joefrocks.com/GoldStockCharts.html has occurred, and indicates that HUI/NEM/XAU's Wave B probably peaked early on 1-25. Often, important cycle highs/lows will occur shortly after gap filling action is completed. That's why cycle trendlines/channels in concert with Elliott Wave patterns and gaps form the basis/crux of "Trade the Cycles."

The XAU has a downside gap from Tuesday 1-26's open at 132.09 and NEM has a downside gap from Tuesday 1-26's open at 43.06, in addition to downside gaps at 41.83, 41.09, and at 40.83.

The Fed took their foot off the pedal the past nine days(http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE), with the exception of Thursday's massive $15.50 Billion, today's and Friday's were average ($5.25 Billion and $6 Billion), a modest $4.00 Billion Wednesday, $3.50 Billion on Tuesday, $2.00 Billion and $1.75 Billion on Friday 1-19 and Wednesday 1-17, versus an average of $5-6 Billion/day, and, Thursday 1-18's $11 Billion in Repos, while large, is below the typical $13-14 Billion on punch spiking Thursday (much more on recent Thursdays). Monday 1-25's was a relatively average $5.75 Billion in credit.

Going abruptly from massive punch spiking to effectively removing the punch bowl could lead to a vicious decline soon (probably began early on 1-25), due to index fund program selling and a much lower level of program buying (program trading accounts for about 70% of the dollar volume on the NYSE).

HUI/NEM/XAU probably entered a vicious Wave C decline (a few weeks) early on 1-25, in which HUI/XAU's Cyclical Bear Market since 5-11-06 (see charts 2, 3, 6, 7, and 9 at http://www.joefrocks.com/GoldStockCharts.html), and, Wave C of NEM's minor intermediate term downcycle since 12-8-06 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html), should bottom.

NEM's cycle low from 10-4-06 at 39.84 should hold, because NEM hit it's primary Secular Bull Market trendline since October 2000, and, hit a major 5% follow through buy signal, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html. Reliable lead indicator NEM should be in a 5+ year Wave 3 Cyclical Bull Market since 10-4-06's cycle low at 39.84. HUI/XAU are in a Wave 2 Cyclical Bear Market since 5-11-06 (have yet to reach their primary trendlines as discussed in subsequent paragraphs).

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. 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 7 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 7, 8, and 9 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 7 and 9 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 two and three 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 8 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 $470ish right now, so, gold would be a great buy in the $470-500 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 7 and 9 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 8 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .

HUI NEM XAU

The Savvy Non Contrarian Gold Commercial Traders Massively Increased Their Short Position

The savvy non contrarian gold Commercial Traders massively increased (by nearly 15%, they added 32,816 futures and options contracts) their short position in the five day period ending Tuesday 1-23, see the last data at http://www.cftc.gov/dea/options/deacmxsof.htm, while the clueless/contrarian gold Speculators massively increased their long position in the five day period ending 1-26, which jives with the expected vicious decline scenario/final Wave C decline (probably began early yesterday, 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=) of HUI/XAU's Cyclical Bear Market since 5-11-06 (see charts 2, 3, 7, 9 at http://www.joefrocks.com/GoldStockCharts.html).

Normally, unusually large (> 10%) changes make the gold Commercial Traders contrarian for the following week and the gold Speculators become non contrarian, however, when the changes become massive, in the 15-20%+ range, they tend to revert to their usual status of non contrarian for the gold Commercial Traders and contrarian/clueless for the gold Speculators. It looks like the savvy gold Commercial Traders went massively short very close to an important gold cycle high ($654ish), while the clueless gold Speculators blundered and went massively long, thinking the good times were back.

After some additional very short term Wave A down (began early yesterday) early today a very short term anemic (bearish sign obviously) Wave B began 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==. The Elliott Wave patterns are there for today's action, but basically a bearish triple top occurred intraday and some early weakness is likely based on the NEM Lead Indicator becoming more bearish towards sessions end (-0.06% versus the XAU today), and, the WMT Lead Indicator was a very bearish -0.88% versus SPX today. I'll be looking to get my shorts on (probably) early on Monday on strength after likely early weakness.

The XAU Put/Call Ratio (February expiration) continues to dramatically collapse (collapsed to 0.92800 today/on 1-26 from 0.98095 on 1-25 from 0.99928 on 1-24 from 1.05875 on 1-23 from 1.09239 on 1-22), which is a very bearish sign that indicates XAU options traders don't understand what's going on/are far too bullish/complacent. XAU Implied Volatility also collapsed in recent days to 27.250 on 1-25 (rose less than the XAU fell yesterday, which was a rise in complacency) from 27.030 on 1-24 from 27.220 on 1-23 from 28.390 on 1-22 from 28.690 on 1-19 from 30.050 on 1-18 from 31.470 on 1-17.

The Elliott Wave count for HUI/XAU is probably (very likely) Wave C, not Wave C of Wave A. Revising it doesn't make much difference concerning what's expected to happen, except that it implies that HUI is about to fall 35-41% from yesterday's countertrend Wave B cycle high to 200-220 (primary multi year Secular Bull Market trendline, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html) in the next few weeks, while NEM's cycle low at 39.84 from 10-4-06 should hold, because NEM reached it's primary multi year Secular Bull Market trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html.

How does HUI fall 35-41% (XAU 30-35%) the next few weeks while NEM only falls 10-11%? The answer probably is that Wave C will also do an Elliott Wave ABC down up down pattern, as Wave A just did (from 12-5-06 until 1-10-07, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=6m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=), and, NEM has to dramatically outperform HUI/XAU the next few weeks during Wave C, just as NEM dramatically underperformed HUI/XAU since it's Wave 1 Cyclical Bull Market cycle high on 1-31-06. Also, NEM's bottom/minor intermediate term cycle low will probably correspond with HUI/XAU's Wave A of Wave C cycle low.

NEM's primary multi year Secular Bull market trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, should hold, and, HUI/XAU should decline to their primary multi year Secular Bull market trendlines, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. The final Wave C decline of HUI/XAU's Wave 2 Cyclical Bear Market probably began early yesterday/1-25.

Program selling due to SPX (S & P 500) weakness will probably play a huge part in the process of driving HUI/XAU down to their primary trendlines. Notice in the 2 year chart of HUI versus SPX (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) how SPX weakness in the Spring of 2005 and 2006 as well as September 2005 coincided with substantial/vicious HUI declines, and, though it isn't obvious in the 2 year chart, the worst part by far of HUI/XAU's vicious downcycle from early September 2006 until 10-4-06 coincided with significant SPX weakness (you can click on the 6 month link in the chart at the link above to see that much better).

The expected upside gap filling scenario discussed on 1-16-07 ("HUI/NEM/XAU began a short term upcycle early last Wednesday, in which they should fill upside gaps at 43.65 and 44 for NEM, and, at 136.95 for the XAU.") and shown in chart 1 at http://www.joefrocks.com/GoldStockCharts.html has occurred, and indicates that HUI/NEM/XAU's Wave B probably peaked early on 1-25. Often, important cycle highs/lows will occur shortly after gap filling action is completed. That's why cycle trendlines/channels in concert with Elliott Wave patterns and gaps form the basis/crux of "Trade the Cycles."

The XAU has a downside gap from Tuesday's open at 132.09 and NEM has a downside gap from Tuesday's open at 43.06, in addition to downside gaps at 41.83, 41.09, and at 40.83.

The Fed took their foot off the pedal the past eight days(http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE), with the exception of yesterday's massive $15.50 Billion, today's was an average $6 Billion, a modest $4.00 Billion Wednesday, $3.50 Billion on Tuesday, $2.00 Billion and $1.75 Billion on Friday and Wednesday 1-17, versus an average of $5-6 Billion/day, and, Thursday 1-18's $11 Billion in Repos, while large, is below the typical $13-14 Billion on punch spiking Thursday (much more on recent Thursdays). Monday's was a relatively average $5.75 Billion in credit.

Going abruptly from massive punch spiking to effectively removing the punch bowl could lead to a vicious decline soon (probably began early on 1-25), due to index fund program selling and a much lower level of program buying (program trading accounts for about 70% of the dollar volume on the NYSE).

HUI/NEM/XAU probably entered a vicious Wave C decline (a few weeks) early on 1-25, in which HUI/XAU's Cyclical Bear Market since 5-11-06 (see charts 2, 3, 6, 7, and 9 at http://www.joefrocks.com/GoldStockCharts.html), and, Wave C of NEM's minor intermediate term downcycle since 12-8-06 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html), should bottom.

NEM's cycle low from 10-4-06 at 39.84 should hold, because NEM hit it's primary Secular Bull Market trendline since October 2000, and, hit a major 5% follow through buy signal, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html. Reliable lead indicator NEM should be in a 5+ year Wave 3 Cyclical Bull Market since 10-4-06's cycle low at 39.84. HUI/XAU are in a Wave 2 Cyclical Bear Market since 5-11-06 (have yet to reach their primary trendlines as discussed in subsequent paragraphs).

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. 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 7 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 7, 8, and 9 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 7 and 9 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 two and three 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 8 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 $470ish right now, so, gold would be a great buy in the $470-500 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 7 and 9 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 8 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .

HUI NEM XAU

More Downside/Very Short Term Wave A Early Today

HUI/NEM/XAU experienced more downside/very short term Wave A 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==, but should soon do a very short term Wave B up, in which I'll be looking to "get my shorts on."

The XAU Put/Call Ratio (February expiration) continues to dramatically collapse (collapsed to 0.92800 today/on 1-26 from 0.98095 on 1-25 from 0.99928 on 1-24 from 1.05875 on 1-23 from 1.09239 on 1-22), which is a very bearish sign that indicates XAU options traders don't understand what's going on/are far too bullish/complacent. XAU Implied Volatility also collapsed in recent days to 27.250 on 1-25 (rose less than the XAU fell yesterday, which was a rise in complacency) from 27.030 on 1-24 from 27.220 on 1-23 from 28.390 on 1-22 from 28.690 on 1-19 from 30.050 on 1-18 from 31.470 on 1-17.

The Elliott Wave count for HUI/XAU is probably (very likely) Wave C, not Wave C of Wave A. Revising it doesn't make much difference concerning what's expected to happen, except that it implies that HUI is about to fall 35-41% from yesterday's countertrend Wave B cycle high to 200-220 (primary multi year Secular Bull Market trendline, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html) in the next few weeks, while NEM's cycle low at 39.84 from 10-4-06 should hold, because NEM reached it's primary multi year Secular Bull Market trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html.

How does HUI fall 35-41% (XAU 30-35%) the next few weeks while NEM only falls 10-11%? The answer probably is that Wave C will also do an Elliott Wave ABC down up down pattern, as Wave A just did (from 12-5-06 until 1-10-07, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=6m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=), and, NEM has to dramatically outperform HUI/XAU the next few weeks during Wave C, just as NEM dramatically underperformed HUI/XAU since it's Wave 1 Cyclical Bull Market cycle high on 1-31-06. Also, NEM's bottom/minor intermediate term cycle low will probably correspond with HUI/XAU's Wave A of Wave C cycle low. NEM's primary multi year Secular Bull market trendline, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, should hold, and, HUI/XAU should decline to their primary multi year Secular Bull market trendlines, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html.

The final Wave C decline of HUI/XAU's Wave 2 Cyclical Bear Market probably began early yesterday/1-25. Program selling due to SPX (S & P 500) weakness will probably play a huge part in the process of driving HUI/XAU down to their primary trendlines. Notice in the 2 year chart of HUI versus SPX (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) how SPX weakness in the Spring of 2005 and 2006 as well as September 2005 coincided with substantial/vicious HUI declines, and, though it isn't obvious in the 2 year chart, the worst part by far of HUI/XAU's vicious downcycle from early September 2006 until 10-4-06 coincided with significant SPX weakness (you can click on the 6 month link in the chart at the link above to see that much better).

The expected upside gap filling scenario discussed on 1-16-07 ("HUI/NEM/XAU began a short term upcycle early last Wednesday, in which they should fill upside gaps at 43.65 and 44 for NEM, and, at 136.95 for the XAU.") and shown in chart 1 at http://www.joefrocks.com/GoldStockCharts.html has occurred, and indicates that HUI/NEM/XAU's Wave B probably peaked early on 1-25. Often, important cycle highs/lows will occur shortly after gap filling action is completed. That's why cycle trendlines/channels in concert with Elliott Wave patterns and gaps form the basis/crux of "Trade the Cycles."

The XAU has a downside gap from Tuesday's open at 132.09 and NEM has a downside gap from Tuesday's open at 43.06, in addition to downside gaps at 41.83, 41.09, and at 40.83.

So, now the correct strategy is to wait for HUI/NEM/XAU to do a very short term Wave B up, and, if you're looking to do so, short some stock and/or buy puts during the very short term Wave B up, in which the NEM and WMT Lead Indicators should be bearish.

The Fed took their foot off the pedal the past eight days(http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE), with the exception of yesterday's massive $15.50 Billion, today's was an average $6 Billion, a modest $4.00 Billion Wednesday, $3.50 Billion on Tuesday, $2.00 Billion and $1.75 Billion on Friday and Wednesday 1-17, versus an average of $5-6 Billion/day, and, Thursday 1-18's $11 Billion in Repos, while large, is below the typical $13-14 Billion on punch spiking Thursday (much more on recent Thursdays). Monday's was a relatively average $5.75 Billion in credit.

Going abruptly from massive punch spiking to effectively removing the punch bowl could lead to a vicious decline soon (probably began early on 1-25), due to index fund program selling and a much lower level of program buying (program trading accounts for about 70% of the dollar volume on the NYSE).

HUI/NEM/XAU have probably entered a vicious Wave C decline (a few weeks) in which HUI/XAU's Cyclical Bear Market since 5-11-06 (see charts 2, 3, 6, 7, and 9 at http://www.joefrocks.com/GoldStockCharts.html), and, Wave C of NEM's minor intermediate term downcycle since 12-8-06 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html), should bottom.

NEM's cycle low from 10-4-06 at 39.84 should hold, because NEM hit it's primary Secular Bull Market trendline since October 2000, and, hit a major 5% follow through buy signal, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html. Reliable lead indicator NEM should be in a 5+ year Wave 3 Cyclical Bull Market since 10-4-06's cycle low at 39.84. HUI/XAU are in a Wave 2 Cyclical Bear Market since 5-11-06 (have yet to reach their primary trendlines as discussed in subsequent paragraphs).

The COT (Commitments Of Traders) data is clearly bearish, since the savvy/non contrarian gold Commercial Traders traded significantly net short, while the clueless/contrarian gold Speculators traded significantly net long, see http://www.cftc.gov/dea/options/deacmxsof.htm. The only bullish aspect is the fact that the clueless/contrarian gold Speculators engaged in an unusually large degree of short covering (short position decreased by > 10%), which points to some significant gold strength this week, which isn't surprising since HUI/NEM/XAU showed some strength for much of last week, aside from Thursday's severe decline.

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. 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 7 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 7, 8, and 9 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 7 and 9 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 two and three 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 8 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 $470ish right now, so, gold would be a great buy in the $470-500 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 7 and 9 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 8 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .

HUI NEM XAU