HUI/XAU's Final Major Wave C Down Of The Wave 2 Cyclical Bear Market
HUI/XAU's "final" (major Wave C, there will be smaller Elliott Wave patterns) Wave C Down of the Wave 2 Cyclical Bear Market since 5-11-06 (see (new) chart 1 at http://www.joefrocks.com/GoldStockCharts.html) probably began mid session on Friday, 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==. HUI/NEM/XAU are/appear to be doing a severe 1 dayish Wave A down, 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==. I'll be looking to go short/buy puts in a 1 dayish countertrend Wave B upcycle that will probably start today.
When a cycle breaks down a decline to the next longer cycle trendline almost always (if not always) occurs, which is why HUI/XAU should bottom at their Secular Bull Market trendlines in effect since late 2000 at 200-220 for HUI (220ish if HUI's primary trendline turns up) and at 85-90 for the XAU. Reliable lead indicator NEM already did this, bottoming at it's Secular Bull Market trendline in effect since October 2000 on 10-4-06, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, after it's Wave 1 Cyclical Bull Market peaked on 1-31-06.
The next 3-6 weeks will probably be a massacre for the precious metals sector. Many gold/silver stocks will probably decline 30-40-50-60-70%+. The COT data has been very bearish the past 3 weeks, the 1 year NEM Lead indicator is very bearish (http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem), Lycos Thomson I Watch has been bearish in recent weeks (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?t=NEM&range=7&mgp=0&i=3&hdate=&x=10&y=8), sentiment among gold writers is far too bullish ("Up and Away" and "HUI Is Heading To 700-900"), etc.
The latest COT data for the 5 session period ending 2-6-07 is clearly bearish, see the last data at http://www.cftc.gov/dea/options/deacmxsof.htm, since the savvy non contrarian gold Commercial Traders aggressively shorted gold, while also taking advantage of the recent modest gold strength, since they did a significant long trade, that was much smaller than the short selling they engaged in.
The savvy non contrarian gold Commercial Traders engaged in massive long liquidation in the five session period ending 1-30-07 (-17.50% decrease in long position), and, they massively increased their short position in the five session period ending 1-23-07 (nearly 15% increase in short position). The COT data obviously points to a major decline in gold in the near future. The clueless gold Speculators have been trading aggressively net long in recent weeks, which is another very bearish sign. They almost always do the opposite of what the savvy gold Commercial Traders do.
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 7 and 9 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 two and three 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 8 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 7 and 9 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 8 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
When a cycle breaks down a decline to the next longer cycle trendline almost always (if not always) occurs, which is why HUI/XAU should bottom at their Secular Bull Market trendlines in effect since late 2000 at 200-220 for HUI (220ish if HUI's primary trendline turns up) and at 85-90 for the XAU. Reliable lead indicator NEM already did this, bottoming at it's Secular Bull Market trendline in effect since October 2000 on 10-4-06, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, after it's Wave 1 Cyclical Bull Market peaked on 1-31-06.
The next 3-6 weeks will probably be a massacre for the precious metals sector. Many gold/silver stocks will probably decline 30-40-50-60-70%+. The COT data has been very bearish the past 3 weeks, the 1 year NEM Lead indicator is very bearish (http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem), Lycos Thomson I Watch has been bearish in recent weeks (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?t=NEM&range=7&mgp=0&i=3&hdate=&x=10&y=8), sentiment among gold writers is far too bullish ("Up and Away" and "HUI Is Heading To 700-900"), etc.
The latest COT data for the 5 session period ending 2-6-07 is clearly bearish, see the last data at http://www.cftc.gov/dea/options/deacmxsof.htm, since the savvy non contrarian gold Commercial Traders aggressively shorted gold, while also taking advantage of the recent modest gold strength, since they did a significant long trade, that was much smaller than the short selling they engaged in.
The savvy non contrarian gold Commercial Traders engaged in massive long liquidation in the five session period ending 1-30-07 (-17.50% decrease in long position), and, they massively increased their short position in the five session period ending 1-23-07 (nearly 15% increase in short position). The COT data obviously points to a major decline in gold in the near future. The clueless gold Speculators have been trading aggressively net long in recent weeks, which is another very bearish sign. They almost always do the opposite of what the savvy gold Commercial Traders do.
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 7 and 9 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 two and three 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 8 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 7 and 9 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 8 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
7:36 AM
