.......New HUI Chart With The Elliott Wave Count
A picture sometimes is worth much more than any number of words can convey. In the latest annotated HUI chart, see chart one at http://www.joefrocks.com/GoldStockCharts.html, one should make the following highly important observations:
1. HUI has a succession of lower cycle highs since putting in a Wave 1 Cyclical Bull Market cycle high on 5-11-06 a bit above 401. They are Wave B of the Wave 2 Cyclical Bear Market, Wave B of Wave C of the Wave 2 Cyclical Bear Market, and, Wave B of Wave C of Wave C (Wave C of Wave C began on 12-5-06) of the Wave 2 Cyclical Bear Market, that appears to have just occurred/peaked mid session yesterday. So, the final Wave C decline of HUI/XAU's Wave 2 Cyclical Bear Market since 5-11-06 probably began mid session on 2-9-07/yesterday.
2. Also note that HUI remains way above it's primary Secular Bull Market trendline in effect since November 2000, currently at 200ish. HUI closed at 340.06 on 2-9-07/yesterday. So, HUI is 140/340 = 41% above it's primary trendline at yesterday's close. Combine that with a succession of lower cycle highs since 5-11-06's Wave 1 Cyclical Bull Market cycle high and an Elliott Wave count that indicates the final Wave C decline of HUI/XAU's Wave 2 Cyclical Bear Market just began yesterday, and one has to be very cautious/bearish now.
Amazingly (???, actually they tend to be terrible) most gold writers are bullish now, according to Mark Hulbert, and, from skimming some of the gold writers work.
XAU Implied Volatility points to potentially severe weakness on Monday, since it fell -4.58% to 25.965 on 2-9 from 27.210 on 2-8 versus a -0.17% decline in the XAU on 2-9, which is a +4.75% rise in complacency, because, the XAU wall of worry shrank by -4.75% = -4.58% + -0.17%.
I'll be looking to (doesn't mean I will) load up on XAU puts and may short NEM and/or GDX on Monday in an intraday countertrend Wave B upcycle.
In the one year GLD (gold ETF) versus SPX (S & P 500) chart, note that GLD tends to follow SPX due to program trading (about 70% of the dollar volume on the NYSE, which is why one must also time SPX), see http://finance.yahoo.com/q/ta?s=GLD&t=1y&l=off&z=l&q=c&p=&a=m26-12-9,m26-12-9,p12,m26-12-9,p12,fs,m26-12-9,p12,fs,w14&c=%5EGSPC. Manipulation of gold is basically impossible due to program trading. Note how closely SPX's correction in May/June 2006 coincided with GLD's decline (start of a Cyclical Bear Market) at that time.
Yesterday's last post is at http://tradethecycles.blogspot.com/2007/02/welcome-to-huixaus-final-wave-c.html.
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
1. HUI has a succession of lower cycle highs since putting in a Wave 1 Cyclical Bull Market cycle high on 5-11-06 a bit above 401. They are Wave B of the Wave 2 Cyclical Bear Market, Wave B of Wave C of the Wave 2 Cyclical Bear Market, and, Wave B of Wave C of Wave C (Wave C of Wave C began on 12-5-06) of the Wave 2 Cyclical Bear Market, that appears to have just occurred/peaked mid session yesterday. So, the final Wave C decline of HUI/XAU's Wave 2 Cyclical Bear Market since 5-11-06 probably began mid session on 2-9-07/yesterday.
2. Also note that HUI remains way above it's primary Secular Bull Market trendline in effect since November 2000, currently at 200ish. HUI closed at 340.06 on 2-9-07/yesterday. So, HUI is 140/340 = 41% above it's primary trendline at yesterday's close. Combine that with a succession of lower cycle highs since 5-11-06's Wave 1 Cyclical Bull Market cycle high and an Elliott Wave count that indicates the final Wave C decline of HUI/XAU's Wave 2 Cyclical Bear Market just began yesterday, and one has to be very cautious/bearish now.
Amazingly (???, actually they tend to be terrible) most gold writers are bullish now, according to Mark Hulbert, and, from skimming some of the gold writers work.
XAU Implied Volatility points to potentially severe weakness on Monday, since it fell -4.58% to 25.965 on 2-9 from 27.210 on 2-8 versus a -0.17% decline in the XAU on 2-9, which is a +4.75% rise in complacency, because, the XAU wall of worry shrank by -4.75% = -4.58% + -0.17%.
I'll be looking to (doesn't mean I will) load up on XAU puts and may short NEM and/or GDX on Monday in an intraday countertrend Wave B upcycle.
In the one year GLD (gold ETF) versus SPX (S & P 500) chart, note that GLD tends to follow SPX due to program trading (about 70% of the dollar volume on the NYSE, which is why one must also time SPX), see http://finance.yahoo.com/q/ta?s=GLD&t=1y&l=off&z=l&q=c&p=&a=m26-12-9,m26-12-9,p12,m26-12-9,p12,fs,m26-12-9,p12,fs,w14&c=%5EGSPC. Manipulation of gold is basically impossible due to program trading. Note how closely SPX's correction in May/June 2006 coincided with GLD's decline (start of a Cyclical Bear Market) at that time.
Yesterday's last post is at http://tradethecycles.blogspot.com/2007/02/welcome-to-huixaus-final-wave-c.html.
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
1:45 PM
