The NEM Lead Indicator Was A Bearish -0.85% Versus The XAU Today
The NEM Lead Indicator was a bearish -0.85% versus the XAU today, after being a very bearish -1.64% on Friday. The major downcycle that probably began on Friday for HUI/XAU has begun very flat, 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=, but, the very bearish NEM Lead Indicator the past two sessions points to likely severe weakness for the next session or two if not longer.
Lycos Thomson I Watch revealed very bearish/strong sell interest today for NEM (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=nem), GFI (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=gfi), and, for WMT (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=wmt).
Offsetting factors that are likely to mitigate the likely decline some are a very bullish WMT Lead Indicator today at +1.00% versus the S & P 500 (SPX), and, continued massive Fed Credit that fuels index fund program traders (accounts for about 70% of the dollar volume on the NYSE).
If the expected very sharp decline occurs during the next day or two, I'll be looking to (doesn't mean I mechanically will, I'll assess the situation at the time) exit my NEM short/XAU puts positions. The next time I trade XAU puts it'll probably be the April expiration, because March expires on the 16th.
Watch NEM's downside gaps at 45.34 and 43.88, and, the XAU's downside gaps at 145.82 and 136.10. If the XAU closely approaches 136.10 it'll probably fill it before a very short term Wave B type rebound occurs. Likewise of course for any gap.
The XAU has downside gaps at 145.82, 136.10, and 132.09, and, NEM has downside gaps at 45.34, 43.88, 43.06, 41.83, 41.09, and 40.83. Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps is the basis/crux of "Trade the Cycles."
Fed Credit was a large $9.50 Billion today, was an average $5.50 Billion on Friday 2-23 (http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE), after a very massive $23.75 Billion on Thursday, and, the weekly Fed Credit data has revealed sharp increases in 3 of the past 4 weeks, see http://www.federalreserve.gov/releases/h41/. The Rollover Barometer is at "likely," which means one probably shouldn't sell short/buy puts right now.
The average daily Fed Credit (Repos) in the 5 day period ending 2-21-07 was $7.04 Billion. Fed Credit the past 3 days has already exceeded the 5 day period ending 2-21-07's total of a little more than $35 Billion. Based on the NEM Lead Indicator, which has been very bearish the past session+, and Fed Credit, it looks like there will be a very sharp decline early this week followed by a sharp rebound.
Annotated chart 1 at http://www.joefrocks.com/GoldStockCharts.html shows HUI as of 2-9-07 with Elliott Wave count. HUI/XAU are in a major Wave C decline of their Wave 2 Cyclical Bear Market since 5-11-06 (Secular Bull Market since late 2000).
So, HUI/XAU are in a very bearish major Wave C decline, the one 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), the COT (Commitments Of Traders) data has been very bearish the past 6-7 weeks, Lycos Thomson I Watch has been bearish for most of the past 3 weeks, and, is very bearish so far today (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?t=NEM&range=0&mgp=0&i=2&hdate=&x=9&y=9), the XAU has a bearish declining peaks chart pattern going back to 5-11-06 (HUI's is only slightly better), HUI/XAU are 40-45%+ above their primary Secular Bull Market trendlines, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html.
Basic technical analysis alone indicates a clearly bearish picture. Would you buy a stock with a declining peaks chart pattern going back over 9 months??? Yet, most gold writers are bullish??? Truth really is stranger than fiction.
The "e mail indicator" is going off lately, with people questioning my system/work. Always happens near important cycle highs.
In the next few months HUI/XAU should decline 40-45%+ to their primary multi year Secular Bull Market trendlines in effect since November/October 2000, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. HUI's target range is 200-220 (220 if the primary trendline turns up) and the XAU's is 85-90.
See the last COT data at http://www.cftc.gov/dea/options/deacmxsof.htm. The savvy gold Commercial Traders traded net short, adding to their short position, though not nearly as much as in previous weeks (been going massively short), and, they also traded a respectable long position for the third straight week, benefitting from last week's gold strength.
HUI put in a near perfect slightly higher bearish double top (assuming HUI has peaked) on Friday with the 12-5-06 minor intermediate term cycle high, so, HUI's Elliott Wave count gets reset to Wave A along with NEM's.
HUI and the XAU probably peaked Friday. The 1 day lag between when NEM and HUI/XAU peaked is a sign that an important cycle high occurred. In the new HUI chart I did the Elliott Wave count indicated that an important peak was imminent, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html.
Massive index fund program trader buying (fueled by Fed Credit) has led to much of the strength in recent weeks (upcycle began 1-10-07 and probably peaked on 2-23-07), propping up SPX/HUI/NEM/XAU (led to a great deal of deceptive rollover action).
HUI/XAU are in Wave C of Wave C of the Wave 2 Cyclical Bear Market since 5-11-06. In the next few months 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 Friday 2-23 for HUI (12-5-06 for the XAU), when minor intermediate term cycle highs occurred, see charts three and four 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 5-6 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
Lycos Thomson I Watch revealed very bearish/strong sell interest today for NEM (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=nem), GFI (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=gfi), and, for WMT (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=wmt).
Offsetting factors that are likely to mitigate the likely decline some are a very bullish WMT Lead Indicator today at +1.00% versus the S & P 500 (SPX), and, continued massive Fed Credit that fuels index fund program traders (accounts for about 70% of the dollar volume on the NYSE).
If the expected very sharp decline occurs during the next day or two, I'll be looking to (doesn't mean I mechanically will, I'll assess the situation at the time) exit my NEM short/XAU puts positions. The next time I trade XAU puts it'll probably be the April expiration, because March expires on the 16th.
Watch NEM's downside gaps at 45.34 and 43.88, and, the XAU's downside gaps at 145.82 and 136.10. If the XAU closely approaches 136.10 it'll probably fill it before a very short term Wave B type rebound occurs. Likewise of course for any gap.
The XAU has downside gaps at 145.82, 136.10, and 132.09, and, NEM has downside gaps at 45.34, 43.88, 43.06, 41.83, 41.09, and 40.83. Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps is the basis/crux of "Trade the Cycles."
Fed Credit was a large $9.50 Billion today, was an average $5.50 Billion on Friday 2-23 (http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE), after a very massive $23.75 Billion on Thursday, and, the weekly Fed Credit data has revealed sharp increases in 3 of the past 4 weeks, see http://www.federalreserve.gov/releases/h41/. The Rollover Barometer is at "likely," which means one probably shouldn't sell short/buy puts right now.
The average daily Fed Credit (Repos) in the 5 day period ending 2-21-07 was $7.04 Billion. Fed Credit the past 3 days has already exceeded the 5 day period ending 2-21-07's total of a little more than $35 Billion. Based on the NEM Lead Indicator, which has been very bearish the past session+, and Fed Credit, it looks like there will be a very sharp decline early this week followed by a sharp rebound.
Annotated chart 1 at http://www.joefrocks.com/GoldStockCharts.html shows HUI as of 2-9-07 with Elliott Wave count. HUI/XAU are in a major Wave C decline of their Wave 2 Cyclical Bear Market since 5-11-06 (Secular Bull Market since late 2000).
So, HUI/XAU are in a very bearish major Wave C decline, the one 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), the COT (Commitments Of Traders) data has been very bearish the past 6-7 weeks, Lycos Thomson I Watch has been bearish for most of the past 3 weeks, and, is very bearish so far today (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?t=NEM&range=0&mgp=0&i=2&hdate=&x=9&y=9), the XAU has a bearish declining peaks chart pattern going back to 5-11-06 (HUI's is only slightly better), HUI/XAU are 40-45%+ above their primary Secular Bull Market trendlines, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html.
Basic technical analysis alone indicates a clearly bearish picture. Would you buy a stock with a declining peaks chart pattern going back over 9 months??? Yet, most gold writers are bullish??? Truth really is stranger than fiction.
The "e mail indicator" is going off lately, with people questioning my system/work. Always happens near important cycle highs.
In the next few months HUI/XAU should decline 40-45%+ to their primary multi year Secular Bull Market trendlines in effect since November/October 2000, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. HUI's target range is 200-220 (220 if the primary trendline turns up) and the XAU's is 85-90.
See the last COT data at http://www.cftc.gov/dea/options/deacmxsof.htm. The savvy gold Commercial Traders traded net short, adding to their short position, though not nearly as much as in previous weeks (been going massively short), and, they also traded a respectable long position for the third straight week, benefitting from last week's gold strength.
HUI put in a near perfect slightly higher bearish double top (assuming HUI has peaked) on Friday with the 12-5-06 minor intermediate term cycle high, so, HUI's Elliott Wave count gets reset to Wave A along with NEM's.
HUI and the XAU probably peaked Friday. The 1 day lag between when NEM and HUI/XAU peaked is a sign that an important cycle high occurred. In the new HUI chart I did the Elliott Wave count indicated that an important peak was imminent, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html.
Massive index fund program trader buying (fueled by Fed Credit) has led to much of the strength in recent weeks (upcycle began 1-10-07 and probably peaked on 2-23-07), propping up SPX/HUI/NEM/XAU (led to a great deal of deceptive rollover action).
HUI/XAU are in Wave C of Wave C of the Wave 2 Cyclical Bear Market since 5-11-06. In the next few months 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 Friday 2-23 for HUI (12-5-06 for the XAU), when minor intermediate term cycle highs occurred, see charts three and four 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 5-6 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
1:14 PM
