......Trust Me, An HUI/XAU Massacre Is Coming
While one can never say with 100% certainty, trust me, an HUI/XAU massacre is (very likely) coming soon, and, massive Fed Credit has been propping up SPX/HUI/NEM/XAU in recent weeks/months, which has led to a great deal of deceptive rollover action.
My bearishness is based on (I don't make "calls" or predictions, I use cycle trendlines, Elliott Wave, indicators, data, TA, etc. and THEY (the system) reveal the picture NOT me):
1. Most importantly, what the cycles in concert with Elliott Wave indicate, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html that shows HUI as of 2-9-07. HUI/XAU should soon enter (may have late today or might do so early tomorrow) the final major Wave C decline of their Wave 2 Cyclical Bear Market (since 5-11-06).
2. HUI is about 45% above it's PRIMARY multi year Secular Bull Market trendline, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html. That alone, basic TA, tells one that the PM sector isn't timely right now for long term investors.
3. More basic TA, HUI/XAU have a DECLINING PEAKS pattern going back to May 11, 2006. That's BEARISH.
4. The savvy non contrarian gold Commercial Traders have gone massively short gold the past 5-6 weeks, while also trading significant long positions in recent weeks to take advantage of the generally modest gold strength (today was probably a final blowoff spike/sucker's rally).
5. The one year NEM Lead Indicator is extremely bearish, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem.
6. Letter writers are about 80% bullish now and investors/traders seem to be as well. There's WAY too much bullishness which is BEARISH.
The latest COT data for the 5 day period ending 2-13-07, similar to last week's data, is extremely bearish on an intermediate term cycle basis (weeks/months), but points to some strength in gold this week, see http://www.cftc.gov/dea/options/deacmxsof.htm, since the savvy non contrarian gold Commercial Traders aggressively shorted gold, but also did a significant long trade (points to some strength), 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.
The previous post is at http://tradethecycles.blogspot.com/2007/02/huinemxau-wave-b-blowoff-spikesuckers.html.
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
My bearishness is based on (I don't make "calls" or predictions, I use cycle trendlines, Elliott Wave, indicators, data, TA, etc. and THEY (the system) reveal the picture NOT me):
1. Most importantly, what the cycles in concert with Elliott Wave indicate, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html that shows HUI as of 2-9-07. HUI/XAU should soon enter (may have late today or might do so early tomorrow) the final major Wave C decline of their Wave 2 Cyclical Bear Market (since 5-11-06).
2. HUI is about 45% above it's PRIMARY multi year Secular Bull Market trendline, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html. That alone, basic TA, tells one that the PM sector isn't timely right now for long term investors.
3. More basic TA, HUI/XAU have a DECLINING PEAKS pattern going back to May 11, 2006. That's BEARISH.
4. The savvy non contrarian gold Commercial Traders have gone massively short gold the past 5-6 weeks, while also trading significant long positions in recent weeks to take advantage of the generally modest gold strength (today was probably a final blowoff spike/sucker's rally).
5. The one year NEM Lead Indicator is extremely bearish, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem.
6. Letter writers are about 80% bullish now and investors/traders seem to be as well. There's WAY too much bullishness which is BEARISH.
The latest COT data for the 5 day period ending 2-13-07, similar to last week's data, is extremely bearish on an intermediate term cycle basis (weeks/months), but points to some strength in gold this week, see http://www.cftc.gov/dea/options/deacmxsof.htm, since the savvy non contrarian gold Commercial Traders aggressively shorted gold, but also did a significant long trade (points to some strength), 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.
The previous post is at http://tradethecycles.blogspot.com/2007/02/huinemxau-wave-b-blowoff-spikesuckers.html.
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
3:11 PM
