The Very Bearish One Year And Short Term NEM Lead Indicator
The one year NEM Lead Indicator is very bearish, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem. The NEM Lead Indicator was a bearish -2.41% versus the XAU last week and was a bearish -2.19% the week before.
Some strength, that may be a brief spike followed by a downtrend, is likely early tomorrow, because HUI/XAU will probably put in a very short term Wave 5 cycle high (see http://tradethecycles.blogspot.com/2006/12/huixau-should-put-in-very-short-term.html). Then it should be DOWN.
HUI/XAU hit minor intermediate term cycle highs on 12-5-06 (HUI/XAU) (see charts 1 and 2 at http://www.joefrocks.com/GoldStockCharts.html) and NEM did so on 12-8-06.
The gold COT (Commitments Of Traders) data points mostly to weakness in gold this week, because the non contrarian/savvy gold Commercial Traders traded significantly net short. They engaged in significant long liquidation and significant short selling, see last data at http://www.cftc.gov/dea/options/deacmxsof.htm.
The good news is that the contrarian/clueless gold Speculators also traded net short, a rare case where they traded in the same direction as the Commercial Traders on a net basis, but, the difference being they made a significant long trade while the Commercial Traders engaged in significant long liquidation. The Speculators significant long trade points to some gold weakness this week, but, the fact that they traded net short points to some strength.
The silver COT (Commitments Of Traders) data is much more bullish than gold, since the non contrarian/savvy silver Commercial Traders traded substantially net long versus the contrarian/clueless silver Speculators trading substantially net short, see first data at http://www.cftc.gov/dea/options/deacmxsof.htm. However, the fact that the silver Commercial Traders engaged in significant long liquidation is a bearish sign, so, the silver COT data isn't that bullish, it's just much more bullish than gold's is.
The US Dollar COT is basically neutral in terms of the latest changes, but, the non contrarian/savvy US Dollar Commercial Traders are massively net long and the contrarian/clueless US Dollar Speculators are massively net short, which points to substantial US Dollar strength the next few weeks, see last data at http://www.cftc.gov/dea/options/deanybtsof.htm.
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
Some strength, that may be a brief spike followed by a downtrend, is likely early tomorrow, because HUI/XAU will probably put in a very short term Wave 5 cycle high (see http://tradethecycles.blogspot.com/2006/12/huixau-should-put-in-very-short-term.html). Then it should be DOWN.
HUI/XAU hit minor intermediate term cycle highs on 12-5-06 (HUI/XAU) (see charts 1 and 2 at http://www.joefrocks.com/GoldStockCharts.html) and NEM did so on 12-8-06.
The gold COT (Commitments Of Traders) data points mostly to weakness in gold this week, because the non contrarian/savvy gold Commercial Traders traded significantly net short. They engaged in significant long liquidation and significant short selling, see last data at http://www.cftc.gov/dea/options/deacmxsof.htm.
The good news is that the contrarian/clueless gold Speculators also traded net short, a rare case where they traded in the same direction as the Commercial Traders on a net basis, but, the difference being they made a significant long trade while the Commercial Traders engaged in significant long liquidation. The Speculators significant long trade points to some gold weakness this week, but, the fact that they traded net short points to some strength.
The silver COT (Commitments Of Traders) data is much more bullish than gold, since the non contrarian/savvy silver Commercial Traders traded substantially net long versus the contrarian/clueless silver Speculators trading substantially net short, see first data at http://www.cftc.gov/dea/options/deacmxsof.htm. However, the fact that the silver Commercial Traders engaged in significant long liquidation is a bearish sign, so, the silver COT data isn't that bullish, it's just much more bullish than gold's is.
The US Dollar COT is basically neutral in terms of the latest changes, but, the non contrarian/savvy US Dollar Commercial Traders are massively net long and the contrarian/clueless US Dollar Speculators are massively net short, which points to substantial US Dollar strength the next few weeks, see last data at http://www.cftc.gov/dea/options/deanybtsof.htm.
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
11:58 AM
