A Brief HUI/NEM/XAU Pop Due To Massive Fed Credit
Massive Fed Credit ($18.50 Billion today, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm) led to some S & P 500 (SPX) strength early today that led to HUI/NEM/XAU strength due to program buying. It looked like NEM's very short term Wave 5 might have peaked before yesterday's close, and, it might have were it not for today's massive Fed Credit, see http://finance.yahoo.com/q/ta?s=nem&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==.
The XAU filled it's upside gap from yesterday's open at 132.14 early today, which normally would lead me to believe that Wave B up (of the major downcycle since 12-5-06) had begun, but, since NEM filled it's downside gap at 42.21 yesterday, it's likely that it'll at least fill it's downside gap at 41.83 before Wave B begins. NEM's cycle low yesterday was 41.91, and, when a stock/index comes that close to a gap, it usually fills it before heading in the other direction. Today's brief spike at the open was just a large spike due to massive Fed Credit and probably doesn't change what I discussed in the previous post.
The NEM Lead Indicator was a slightly bearish -0.22% versus the XAU yesterday, and, the WMT (Walmart) Lead Indicator was a bearish -0.42% versus SPX yesterday, which points to significant and potentially severe weakness in HUI/NEM/XAU today, with S & P 500 (SPX) weakness probably being a major factor due to index fund program selling, which accounts for about 70% of the dollar volume on the NYSE.
NEM began to fill it's cluster of downside gaps at 42.21 (filled), 41.83, 41.09, and 40.83 early yesterday, thanks probably to program selling due to S & P 500 (SPX) weakness, so, Wave A of HUI/XAU's major downcycle since 12-5-06 remains in effect. One has to assume that NEM's downside gap at 41.83 will get filled this week, and, possibly also 41.09 and 40.83 will get filled before Wave B up of HUI/XAU's major downcycle begins. NEM's minor intermediate term downcycle since 12-8-06 should bottom at 40.50ish, shortly after filling the last downside gap at 40.83.
NEM may fill it's cluster of downside gaps at 42.21 (filled), 41.83, 41.09, and 40.83 and conclude it's minor intermediate term downcycle since 12-8-06 in the next few days. NEM's Wave 2 Cyclical Bear Market (very likely, 90%+ probability) that began on 1-31-06 ended on 10-4-06 at 39.84, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html.
The XAU has upside gaps at 134.41 and 136.95. NEM has upside gaps at 43.65 and 44. WMT has a downside gap at 46.18 from 1-3-07's open.
NEM's entire minor intermediate term downcycle since 12-8-06 may coincide with Wave A of HUI/XAU's major downcycle since 12-5-06, then Wave 1 up of NEM's upcoming minor intermediate term upcycle may coincide with Wave B up of HUI/XAU's major downcycle, and, Wave 2 down of NEM's minor intermediate term upcycle may coincide with the final Wave C down of HUI/XAU's major downcycle (The final Wave C in which HUI/XAU's Cyclical Bear Market since 5-11-06 should bottom at 200-220 for HUI and at 85-90 for the XAU, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html).
The latest COT (Commitments Of Traders) data released on Monday is clearly bearish, see last data at http://www.cftc.gov/dea/options/deacmxsof.htm, since the savvy non contrarian gold Commercial Traders traded significantly net short, while the clueless/contrarian gold Speculators traded significantly net long, and, note that they made a relatively aggressive long trade of 10,244 futures and options contracts shortly before gold plunged.
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 6 at http://www.joefrocks.com/GoldStockCharts.html), with much of that decline probably due to program selling related to SPX (S & P 500) weakness, notice how HUI has been following SPX the past 5 sessions, see http://finance.yahoo.com/q/ta?t=5d&s=%5EHUI&l=off&z=l&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=&c=%5EGSPC.
Many gold/silver stocks are likely to decline 30-40-50%+ FROM HERE in the next few weeks. You need to determine where the Secular Bull Market PRIMARY trendline is for your gold/silver stocks, see charts 6, 7, and 8 at http://www.joefrocks.com/GoldStockCharts.html for examples. I haven't seen a single gold/silver writer who understands that a Cyclical Bear Market is in effect right now.
HUI/XAU are in Wave C of Wave C of the Wave 2 Cyclical Bear Market since 5-11-06. In the next 3-6 weeks HUI/XAU should do exactly what reliable lead indicator NEM has already done, which is to decline to their primary multi-year Secular Bull Market/very long term upcycle trendlines, currently at 200-220ish (could turn up which is why there's a wide range) for HUI and at 85-90ish for the XAU, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html. NEM did a Wave A down, a Wave B up, then it's Wave C did an ABC down up down pattern, which is exactly what HUI/XAU appear to be doing, with Wave C of Wave C probably having begun Tuesday 12-5, when minor intermediate term cycle highs occurred, see charts one and two at http://www.joefrocks.com/GoldStockCharts.html.
As a long term multi-year investor in any stock, commodity, etc. you want to buy near the primary multi-year Secular Bull Market/very long term upcycle trendline, for example NEM's is at 40ish right now, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html. Therefore, NEM right now would be a great buy in the 40-42 range. Gold's primary multi-year Secular Bull Market/very long term upcycle trendline is at $525ish right now, so, gold would be a great buy in the $525-550 range. When the vast majority of gold writers say it's a great time to buy or are bullish, as they almost always are, it's rarely a good time for long term investors to buy. The vast majority of gold writers couldn't time their way out of a paper bag. They tend to be terrible.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html. NEM's Wave 2 Cyclical Bear Market that began on 1-31-06 ended on 10-4-06 at 39.84, so, reliable lead indicator NEM is probably in a 5 yearish Wave 3 Cyclical Bull Market since 10-4-06, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
The XAU filled it's upside gap from yesterday's open at 132.14 early today, which normally would lead me to believe that Wave B up (of the major downcycle since 12-5-06) had begun, but, since NEM filled it's downside gap at 42.21 yesterday, it's likely that it'll at least fill it's downside gap at 41.83 before Wave B begins. NEM's cycle low yesterday was 41.91, and, when a stock/index comes that close to a gap, it usually fills it before heading in the other direction. Today's brief spike at the open was just a large spike due to massive Fed Credit and probably doesn't change what I discussed in the previous post.
The NEM Lead Indicator was a slightly bearish -0.22% versus the XAU yesterday, and, the WMT (Walmart) Lead Indicator was a bearish -0.42% versus SPX yesterday, which points to significant and potentially severe weakness in HUI/NEM/XAU today, with S & P 500 (SPX) weakness probably being a major factor due to index fund program selling, which accounts for about 70% of the dollar volume on the NYSE.
NEM began to fill it's cluster of downside gaps at 42.21 (filled), 41.83, 41.09, and 40.83 early yesterday, thanks probably to program selling due to S & P 500 (SPX) weakness, so, Wave A of HUI/XAU's major downcycle since 12-5-06 remains in effect. One has to assume that NEM's downside gap at 41.83 will get filled this week, and, possibly also 41.09 and 40.83 will get filled before Wave B up of HUI/XAU's major downcycle begins. NEM's minor intermediate term downcycle since 12-8-06 should bottom at 40.50ish, shortly after filling the last downside gap at 40.83.
NEM may fill it's cluster of downside gaps at 42.21 (filled), 41.83, 41.09, and 40.83 and conclude it's minor intermediate term downcycle since 12-8-06 in the next few days. NEM's Wave 2 Cyclical Bear Market (very likely, 90%+ probability) that began on 1-31-06 ended on 10-4-06 at 39.84, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html.
The XAU has upside gaps at 134.41 and 136.95. NEM has upside gaps at 43.65 and 44. WMT has a downside gap at 46.18 from 1-3-07's open.
NEM's entire minor intermediate term downcycle since 12-8-06 may coincide with Wave A of HUI/XAU's major downcycle since 12-5-06, then Wave 1 up of NEM's upcoming minor intermediate term upcycle may coincide with Wave B up of HUI/XAU's major downcycle, and, Wave 2 down of NEM's minor intermediate term upcycle may coincide with the final Wave C down of HUI/XAU's major downcycle (The final Wave C in which HUI/XAU's Cyclical Bear Market since 5-11-06 should bottom at 200-220 for HUI and at 85-90 for the XAU, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html).
The latest COT (Commitments Of Traders) data released on Monday is clearly bearish, see last data at http://www.cftc.gov/dea/options/deacmxsof.htm, since the savvy non contrarian gold Commercial Traders traded significantly net short, while the clueless/contrarian gold Speculators traded significantly net long, and, note that they made a relatively aggressive long trade of 10,244 futures and options contracts shortly before gold plunged.
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 6 at http://www.joefrocks.com/GoldStockCharts.html), with much of that decline probably due to program selling related to SPX (S & P 500) weakness, notice how HUI has been following SPX the past 5 sessions, see http://finance.yahoo.com/q/ta?t=5d&s=%5EHUI&l=off&z=l&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=&c=%5EGSPC.
Many gold/silver stocks are likely to decline 30-40-50%+ FROM HERE in the next few weeks. You need to determine where the Secular Bull Market PRIMARY trendline is for your gold/silver stocks, see charts 6, 7, and 8 at http://www.joefrocks.com/GoldStockCharts.html for examples. I haven't seen a single gold/silver writer who understands that a Cyclical Bear Market is in effect right now.
HUI/XAU are in Wave C of Wave C of the Wave 2 Cyclical Bear Market since 5-11-06. In the next 3-6 weeks HUI/XAU should do exactly what reliable lead indicator NEM has already done, which is to decline to their primary multi-year Secular Bull Market/very long term upcycle trendlines, currently at 200-220ish (could turn up which is why there's a wide range) for HUI and at 85-90ish for the XAU, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html. NEM did a Wave A down, a Wave B up, then it's Wave C did an ABC down up down pattern, which is exactly what HUI/XAU appear to be doing, with Wave C of Wave C probably having begun Tuesday 12-5, when minor intermediate term cycle highs occurred, see charts one and two at http://www.joefrocks.com/GoldStockCharts.html.
As a long term multi-year investor in any stock, commodity, etc. you want to buy near the primary multi-year Secular Bull Market/very long term upcycle trendline, for example NEM's is at 40ish right now, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html. Therefore, NEM right now would be a great buy in the 40-42 range. Gold's primary multi-year Secular Bull Market/very long term upcycle trendline is at $525ish right now, so, gold would be a great buy in the $525-550 range. When the vast majority of gold writers say it's a great time to buy or are bullish, as they almost always are, it's rarely a good time for long term investors to buy. The vast majority of gold writers couldn't time their way out of a paper bag. They tend to be terrible.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html. NEM's Wave 2 Cyclical Bear Market that began on 1-31-06 ended on 10-4-06 at 39.84, so, reliable lead indicator NEM is probably in a 5 yearish Wave 3 Cyclical Bull Market since 10-4-06, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
7:17 AM
