..........................Happy New Year!!!
First of all I want to point out that some gold "gurus" (most are jackasses when it comes to market timing) are saying that you "can't lose" in the precious metals sector. Sound familiar? Just like the garbage being spewed in 1999-2000. Many people found out that you can lose big in the precious metals sector in 2006, and, many more will find out early this year, because HUI/XAU are about to implode and conclude their Wave 2 Cyclical Bear Market since 5-11-06, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html. Reliable lead indicator NEM probably concluded it's Wave 2 Cyclical Bear Market (began 1-31-06) on 10-4-06, when it hit a cycle low at 39.84 at it's primary Secular Bull Market trendline in effect since October 2000, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html.
Given the extreme volatility of the precious metals sector relatively infrequent trading makes a lot of sense for many people, though, with good stock selection, a very long term buy and hold strategy can also be a great tax efficient strategy.
Here's the post with "my" 2007 prediction, which is really largely due to my "Trade the Cycles" system: http://tradethecycles.blogspot.com/2006/12/huixau-should-put-in-very-short-term.html. The genius is in my system, I can only time the market with my great system, it's really my system that's timing the market, though I have become good at using Elliott Wave patterns, gaps, etc. It's like anything, it takes a lot of practice and hard work to become good at it.
Here's a post with an example of how to time an individual stock (CDE) using "Trade the Cycles," whose cycles are much different than HUI/NEM/XAU, see http://tradethecycles.blogspot.com/2006/12/one-must-understand-cycles-to-time_28.html. Using cycle trendlines in concert with Elliott Wave patterns and gaps one would have sold CDE well above 7 in early 2004, and, would have bought CDE back between 3 and 4 (below 3 if you were a good bottom picker) in mid 2005, and, would have (as a trader) gotten out again in May 2006 with another huge profit, since CDE rose above 7 again. There's a good chance that CDE is headed back to the 3 to 4 range in the next month or so, but, the cycle low in May 2005 should hold, because it's the start of a Wave 3 Cyclical Bull Market.
Even if you're not certain of the Elliott Wave count or what the cycle trendlines are, using a reasonable guess for both (a disciplined approach) puts you way ahead of wishful thinking and listening to goofball "gurus."
Massive Fed Credit since 12-14 (see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE) has been keeping SPX's downtrend since 12-18 reasonable thanks to index fund program trading, and, so far has prevented HUI/NEM/XAU from experiencing any vicious 3-5%+ declines in a single session.
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
Given the extreme volatility of the precious metals sector relatively infrequent trading makes a lot of sense for many people, though, with good stock selection, a very long term buy and hold strategy can also be a great tax efficient strategy.
Here's the post with "my" 2007 prediction, which is really largely due to my "Trade the Cycles" system: http://tradethecycles.blogspot.com/2006/12/huixau-should-put-in-very-short-term.html. The genius is in my system, I can only time the market with my great system, it's really my system that's timing the market, though I have become good at using Elliott Wave patterns, gaps, etc. It's like anything, it takes a lot of practice and hard work to become good at it.
Here's a post with an example of how to time an individual stock (CDE) using "Trade the Cycles," whose cycles are much different than HUI/NEM/XAU, see http://tradethecycles.blogspot.com/2006/12/one-must-understand-cycles-to-time_28.html. Using cycle trendlines in concert with Elliott Wave patterns and gaps one would have sold CDE well above 7 in early 2004, and, would have bought CDE back between 3 and 4 (below 3 if you were a good bottom picker) in mid 2005, and, would have (as a trader) gotten out again in May 2006 with another huge profit, since CDE rose above 7 again. There's a good chance that CDE is headed back to the 3 to 4 range in the next month or so, but, the cycle low in May 2005 should hold, because it's the start of a Wave 3 Cyclical Bull Market.
Even if you're not certain of the Elliott Wave count or what the cycle trendlines are, using a reasonable guess for both (a disciplined approach) puts you way ahead of wishful thinking and listening to goofball "gurus."
Massive Fed Credit since 12-14 (see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE) has been keeping SPX's downtrend since 12-18 reasonable thanks to index fund program trading, and, so far has prevented HUI/NEM/XAU from experiencing any vicious 3-5%+ declines in a single session.
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
1:37 PM
