The XAU Still "Needs" To Complete Wave 5 Of The Very Short Term Upcycle
The XAU still "needs" to complete Wave 5 of the Very Short Term Upcycle since late Monday, see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, so, early strength tomorrow is likely for HUI/NEM/XAU. Wave 1 peaked early on Tuesday and Wave 3 peaked early on Wednesday.
The lead indicators were modestly bearish in the case of the NEM Lead Indicator at -0.25% versus the XAU today, and, very bullish at +0.92% versus the S & P 500 in the case of the Walmart (WMT) Lead Indicator.
HUI was in a rolling over Wave 5 at session's end (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=), and, NEM appears to have put in a double top Wave 5 cycle high near session's end with yesterday's cycle high, see 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=.
HUI/XAU's countertrend Wave B since 1-10-07 is peaking now instead of last Friday. Reliable lead indicator NEM (so far) didn't exceed last Friday's cycle high, probably leading to the downside as one would expect.
Lycos Thomson I Watch was bullish for a change for NEM, but, was bearish again today for GFI and WMT (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=nem, http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=gfi, http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=wmt), and, has been bearish for much of the past 2 weeks (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?t=NEM&range=30&mgp=0&i=3&hdate=&x=16&y=5).
Combined with very bearish COT data in recent weeks and a very bearish 1 year NEM Lead Indicator (http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem), plus the fact that HUI/XAU should enter the final major Wave C decline of their Wave 2 Cyclical Bear Market (since 5-11-06) tomorrow (new chart 1 at http://www.joefrocks.com/GoldStockCharts.html shows HUI as of last Friday), and, very severe weakness is likely to soon set in for HUI/XAU.
I bought XAU puts (March 130, XAVOF) and shorted some NEM on Tuesday. I'll probably be in that position for roughly a week, maybe longer if an "apocalyptic" decline begins this week.
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 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.
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 be imminent. So, the final Wave C decline of HUI/XAU's Wave 2 Cyclical Bear Market since 5-11-06 probably will begin tomorrow.
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. So, HUI is 140/340 = 41% above it's primary trendline at 2-9'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 should soon begin, 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.
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
The lead indicators were modestly bearish in the case of the NEM Lead Indicator at -0.25% versus the XAU today, and, very bullish at +0.92% versus the S & P 500 in the case of the Walmart (WMT) Lead Indicator.
HUI was in a rolling over Wave 5 at session's end (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=), and, NEM appears to have put in a double top Wave 5 cycle high near session's end with yesterday's cycle high, see 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=.
HUI/XAU's countertrend Wave B since 1-10-07 is peaking now instead of last Friday. Reliable lead indicator NEM (so far) didn't exceed last Friday's cycle high, probably leading to the downside as one would expect.
Lycos Thomson I Watch was bullish for a change for NEM, but, was bearish again today for GFI and WMT (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=nem, http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=gfi, http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=wmt), and, has been bearish for much of the past 2 weeks (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?t=NEM&range=30&mgp=0&i=3&hdate=&x=16&y=5).
Combined with very bearish COT data in recent weeks and a very bearish 1 year NEM Lead Indicator (http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem), plus the fact that HUI/XAU should enter the final major Wave C decline of their Wave 2 Cyclical Bear Market (since 5-11-06) tomorrow (new chart 1 at http://www.joefrocks.com/GoldStockCharts.html shows HUI as of last Friday), and, very severe weakness is likely to soon set in for HUI/XAU.
I bought XAU puts (March 130, XAVOF) and shorted some NEM on Tuesday. I'll probably be in that position for roughly a week, maybe longer if an "apocalyptic" decline begins this week.
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 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.
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 be imminent. So, the final Wave C decline of HUI/XAU's Wave 2 Cyclical Bear Market since 5-11-06 probably will begin tomorrow.
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. So, HUI is 140/340 = 41% above it's primary trendline at 2-9'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 should soon begin, 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.
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
1:56 PM
