I Pounced On Some March 130 XAU Puts (XAVOF)
I pounced on some March 130 XAU Puts (XAVOF) early today at 0.65 per contract or $65 for each 100 shares (that each contract represents). Shortly after I bought someone bought 500 contracts at 0.60, which was a good sign to see a large buy come in. Who knows, maybe my purchase prompted them to buy when they saw the volume increase. The holder of 500 contracts controls 50,000 shares, so, for each point they (may) catch they make $50,000.
I'm also looking to short some NEM in an intraday Wave B today.
Cyclewise I knew today was likely to be the day to short some stock and buy some puts, due to the 1 dayish countertrend Wave B that began late yesterday following a Wave A down, after the final major Wave C of HUI/XAU's Cyclical Bear Market (since 5-11-06) began mid session on 2-9-07, see (new) chart 1 at http://www.joefrocks.com/GoldStockCharts.html and the 5 day chart at 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==.
The NEM Lead Indicator turned bearish early today at -0.60% versus the XAU, and, the XAU Put/Call Ratio (February expiration) collapsed to
0.9498425 today/on 2-13 from 1.0430197 yesterday/on 2-12, which correctly portended some early strength (unusually large >6% rise in complacency points to some strength), but, the collapse points to an XAU collapse soon.
When I saw those indicators, combined with the Elliott Wave count, the only other things I did was check the Elliott Wave count since late yesterday and Lycos Thomson I Watch. They all said short/buy puts. The WMT Lead Indicator was bullish, but, not enough to scare me, and, I figured it would turn bearish.
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
I'm also looking to short some NEM in an intraday Wave B today.
Cyclewise I knew today was likely to be the day to short some stock and buy some puts, due to the 1 dayish countertrend Wave B that began late yesterday following a Wave A down, after the final major Wave C of HUI/XAU's Cyclical Bear Market (since 5-11-06) began mid session on 2-9-07, see (new) chart 1 at http://www.joefrocks.com/GoldStockCharts.html and the 5 day chart at 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==.
The NEM Lead Indicator turned bearish early today at -0.60% versus the XAU, and, the XAU Put/Call Ratio (February expiration) collapsed to
0.9498425 today/on 2-13 from 1.0430197 yesterday/on 2-12, which correctly portended some early strength (unusually large >6% rise in complacency points to some strength), but, the collapse points to an XAU collapse soon.
When I saw those indicators, combined with the Elliott Wave count, the only other things I did was check the Elliott Wave count since late yesterday and Lycos Thomson I Watch. They all said short/buy puts. The WMT Lead Indicator was bullish, but, not enough to scare me, and, I figured it would turn bearish.
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
7:20 AM
