...........Watch Reliable Lead Indicator NEM
Reliable lead indicator NEM created a big gap up at the open today to 47.90 from 46.98 (http://finance.yahoo.com/q/ta?s=nem&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==), which is an obvious candidate for a bullish breakaway gap, BUT, sometimes that happens near cycle highs also. If NEM fills the downside gap at 46.98 that will confirm that NEM and HUI/XAU have probably peaked.
Annotated chart 1 at http://www.joefrocks.com/GoldStockCharts.html shows HUI as of 2-9-07 with Elliott Wave count. HUI/XAU should soon enter (may have today) the final major Wave C decline of their Wave 2 Cyclical Bear Market (since 5-11-06).
Fed Credit continues to be massive, with $23.75 Billion today, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE. Massive index fund program trader buying (fueled by Fed Credit) has led to much of the Wave B (began 1-10-07) strength in recent weeks, propping up SPX/HUI/NEM/XAU (has led to a great deal of deceptive rollover action).
The monster spike move that began early on Tuesday, 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==, is probably the final blowoff phase of the countertrend Wave B that began on 1-10-07 for HUI/XAU, IF NEM didn't break out today. Since NEM took out the 12-8-06 minor intermediate term cycle high, NEM's count gets reset to Wave A once it peaks (may have early today).
I've realized that I need a "Rollover Barometer" that will gauge the likelihood of rollover action. Fed Credit (fuels program traders) and the lead indicators (NEM, WMT) will be used to determine whether rollover action is likely, mildly likely, or unlikely. Last week's weekly Fed Credit data (http://www.federalreserve.gov/releases/h41/Current/, released 4:30 on Thursday) revealed a sharp +$5 .69 Billion rise in credit, combined with punch spiking since then and somewhat bullish NEM/WMT Lead Indicators, meant that rollover action was likely.
The XAU has downside gaps at 136.10, and 132.09, and, NEM has downside gaps at 46.98, 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."
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
Annotated chart 1 at http://www.joefrocks.com/GoldStockCharts.html shows HUI as of 2-9-07 with Elliott Wave count. HUI/XAU should soon enter (may have today) the final major Wave C decline of their Wave 2 Cyclical Bear Market (since 5-11-06).
Fed Credit continues to be massive, with $23.75 Billion today, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE. Massive index fund program trader buying (fueled by Fed Credit) has led to much of the Wave B (began 1-10-07) strength in recent weeks, propping up SPX/HUI/NEM/XAU (has led to a great deal of deceptive rollover action).
The monster spike move that began early on Tuesday, 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==, is probably the final blowoff phase of the countertrend Wave B that began on 1-10-07 for HUI/XAU, IF NEM didn't break out today. Since NEM took out the 12-8-06 minor intermediate term cycle high, NEM's count gets reset to Wave A once it peaks (may have early today).
I've realized that I need a "Rollover Barometer" that will gauge the likelihood of rollover action. Fed Credit (fuels program traders) and the lead indicators (NEM, WMT) will be used to determine whether rollover action is likely, mildly likely, or unlikely. Last week's weekly Fed Credit data (http://www.federalreserve.gov/releases/h41/Current/, released 4:30 on Thursday) revealed a sharp +$5 .69 Billion rise in credit, combined with punch spiking since then and somewhat bullish NEM/WMT Lead Indicators, meant that rollover action was likely.
The XAU has downside gaps at 136.10, and 132.09, and, NEM has downside gaps at 46.98, 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."
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
11:02 AM
