..............The Fed Fears A Hard Landing
The Fed appears to be terrified of a hard landing, since they've been spiking the punch like crazy since 12-14-06, trying to prop up the S & P 500 (SPX), see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE. Today they added a massive $23.75 Billion in credit, huge even for a Thursday (averages about $13-14 Billion on Thursday versus $4-5 Billion on other days). The fact that SPX has been weak despite the massive punch spiking today and since 12-14-06 is a very bearish sign.
SPX's (S & P 500) major intermediate term upcycle since mid June appears to have peaked on 12-18-06 based on Elliott Wave, which will be confirmed if a 5% follow through major sell signal occurs. Also, based on Elliott Wave, I have a lot of confidence in this count, SPX's (S & P 500) major intermediate term upcycle since mid June appears to be the final Wave 5 spike move (the big spike on SPX's chart is a sign that a very important cycle high is probably occurring) of the Cyclical Bull Market since October 2002.
Most sectors, including gold/silver stocks, will probably get hammered in January/February due to index fund program selling as SPX (S & P 500) experiences a major downcycle, that may be the start of a new Cyclical Bear Market. The echo bubble of the huge bubble/very long term cycle high for NDX/SPX has probably ended.
Gold/silver stocks (and most if not all commodities) of course are in a Secular Bull Market/very long term (15-20+ years) upcycle since late 2000 (HUI/NEM/XAU), but, HUI/XAU need to reach their primary Secular Bull Market/very long term upcycle trendlines and conclude the Wave 2 Cyclical Bear Market that began on 5-11-06, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html. Reliable lead indicator NEM's Wave 2 Cyclical Bear Market that began on 1-31-06 ended on 10-4-06 with a cycle low at 39.84, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html.
So, the big picture is that SPX (S & P 500) probably entered a Cyclical Bear Market on 12-18-06 (or soon will), but, with the massive Fed punch spiking, a higher cycle high in rollover mode can't be ruled out. HUI/XAU should enter a 5-7 year Wave 3 Cyclical Bull Market after a dramatic decline to their primary Secular Bull Market/very long term upcycle trendlines.
A number of factors point to a probably short lived but significant/sharp rebound in HUI/NEM/XAU today:
First and most importantly (cycle trendlines/channels in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles") HUI/NEM/XAU have completed Elliott Wave ABC down up down patterns since early last Thursday's cycle highs, 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==. An Elliott Wave 12345 up down up down up pattern appears to have begun early today.
Secondly, the NEM Lead Indicator and the WMT (Walmart) Lead Indicator were very bullish yesterday, with the NEM Lead Indicator being a very bullish +1.62% versus the XAU, and, the WMT (Walmart) Lead Indicator was an extremely bullish +3.08% versus the S & P 500 (SPX), which portends potentially substantial strength in HUI/NEM/XAU/SPX today.
Thirdly, the US Dollar spiked +0.71 yesterday to 83.68, which is a large spike move for the US Dollar, which tends to have very modest % moves on a daily basis. So, the US Dollar is likely to correct some today.
Lastly, today is Fed punch spiking day, and, they've been going nuts spiking the punch since December 14, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.
Once HUI/NEM/XAU complete an Elliott Wave 12345 up down up down up pattern (probably) today, one can look to short and/or buy puts, 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==.
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. The next few sessions may bring brutal declines. 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
SPX's (S & P 500) major intermediate term upcycle since mid June appears to have peaked on 12-18-06 based on Elliott Wave, which will be confirmed if a 5% follow through major sell signal occurs. Also, based on Elliott Wave, I have a lot of confidence in this count, SPX's (S & P 500) major intermediate term upcycle since mid June appears to be the final Wave 5 spike move (the big spike on SPX's chart is a sign that a very important cycle high is probably occurring) of the Cyclical Bull Market since October 2002.
Most sectors, including gold/silver stocks, will probably get hammered in January/February due to index fund program selling as SPX (S & P 500) experiences a major downcycle, that may be the start of a new Cyclical Bear Market. The echo bubble of the huge bubble/very long term cycle high for NDX/SPX has probably ended.
Gold/silver stocks (and most if not all commodities) of course are in a Secular Bull Market/very long term (15-20+ years) upcycle since late 2000 (HUI/NEM/XAU), but, HUI/XAU need to reach their primary Secular Bull Market/very long term upcycle trendlines and conclude the Wave 2 Cyclical Bear Market that began on 5-11-06, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html. Reliable lead indicator NEM's Wave 2 Cyclical Bear Market that began on 1-31-06 ended on 10-4-06 with a cycle low at 39.84, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html.
So, the big picture is that SPX (S & P 500) probably entered a Cyclical Bear Market on 12-18-06 (or soon will), but, with the massive Fed punch spiking, a higher cycle high in rollover mode can't be ruled out. HUI/XAU should enter a 5-7 year Wave 3 Cyclical Bull Market after a dramatic decline to their primary Secular Bull Market/very long term upcycle trendlines.
A number of factors point to a probably short lived but significant/sharp rebound in HUI/NEM/XAU today:
First and most importantly (cycle trendlines/channels in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles") HUI/NEM/XAU have completed Elliott Wave ABC down up down patterns since early last Thursday's cycle highs, 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==. An Elliott Wave 12345 up down up down up pattern appears to have begun early today.
Secondly, the NEM Lead Indicator and the WMT (Walmart) Lead Indicator were very bullish yesterday, with the NEM Lead Indicator being a very bullish +1.62% versus the XAU, and, the WMT (Walmart) Lead Indicator was an extremely bullish +3.08% versus the S & P 500 (SPX), which portends potentially substantial strength in HUI/NEM/XAU/SPX today.
Thirdly, the US Dollar spiked +0.71 yesterday to 83.68, which is a large spike move for the US Dollar, which tends to have very modest % moves on a daily basis. So, the US Dollar is likely to correct some today.
Lastly, today is Fed punch spiking day, and, they've been going nuts spiking the punch since December 14, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.
Once HUI/NEM/XAU complete an Elliott Wave 12345 up down up down up pattern (probably) today, one can look to short and/or buy puts, 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==.
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. The next few sessions may bring brutal declines. 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
7:05 AM
