............NEM's Anemic Attempt At Wave B Up
Massive Fed Credit yesterday ($18.50 Billion) and today ($11.25 Billion, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE) and all reliable lead indicator NEM could manage to do in it's anemic Wave B (minor intermediate term downcycle since 12-8-06, HUI/XAU are in a major downcycle since 12-5-06) since early Wednesday is to put in a slightly higher Wave 3 of Wave B double top cycle high early today, 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==.
This makes sense and jives with the expected dramatic decline that's likely for HUI/XAU, in which their Wave 2 Cyclical Bear Market since 5-11-06 bottoms, at 200-220 for HUI (220ish if HUI's primary Secular Bull Market trendline turns up) and at 85-90 for the XAU, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html.
It's doubtful that NEM will be able to put in a Wave 5 (higher) of Wave B (began early Wednesday) cycle high than the Wave 3 of Wave B double top cycle high that occurred early today. Maybe another slightly higher triple top cycle high will occur.
The inability of HUI/NEM/XAU to stage meaningful sustained rallies, even with massive Fed credit, makes perfect sense right now cyclewise. NEM's Wave 2 Cyclical Bear Market from 1-31-06 until 10-4-06 (see chart 7 at http://www.joefrocks.com/GoldStockCharts.html) did a Wave A down, a Wave B up, then it's Wave C did a large 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.
The XAU has upside gaps at 134.41 and 136.95. NEM has upside gaps at 43.65 and 44. Normally those gaps would get filled in a Wave B upcycle, but that appears doubtful in this case because they're so weak cyclewise. WMT has a downside gap at 47.28 from yesterday's open and at 46.18 from 1-3-07's open.
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 $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 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
This makes sense and jives with the expected dramatic decline that's likely for HUI/XAU, in which their Wave 2 Cyclical Bear Market since 5-11-06 bottoms, at 200-220 for HUI (220ish if HUI's primary Secular Bull Market trendline turns up) and at 85-90 for the XAU, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html.
It's doubtful that NEM will be able to put in a Wave 5 (higher) of Wave B (began early Wednesday) cycle high than the Wave 3 of Wave B double top cycle high that occurred early today. Maybe another slightly higher triple top cycle high will occur.
The inability of HUI/NEM/XAU to stage meaningful sustained rallies, even with massive Fed credit, makes perfect sense right now cyclewise. NEM's Wave 2 Cyclical Bear Market from 1-31-06 until 10-4-06 (see chart 7 at http://www.joefrocks.com/GoldStockCharts.html) did a Wave A down, a Wave B up, then it's Wave C did a large 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.
The XAU has upside gaps at 134.41 and 136.95. NEM has upside gaps at 43.65 and 44. Normally those gaps would get filled in a Wave B upcycle, but that appears doubtful in this case because they're so weak cyclewise. WMT has a downside gap at 47.28 from yesterday's open and at 46.18 from 1-3-07's open.
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 $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 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
7:43 AM
