HUI/NEM/XAU Appear To Have Entered A Very Short Term Wave 5 Upcycle Today
HUI/NEM/XAU appear to have entered a very short term Wave 5 upcycle today (short term upcycle since 3-14-07), 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==.
In the last few hours of the session HUI/XAU did an Elliott Wave 12345 up down up down up pattern, and, were in Wave 5 at session's end, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==, so, some weakness early on Monday is likely. There could also be some Wave 5 follow through strength at the open obviously.
Reliable lead indicator NEM's very short term Wave 4 bottomed early in the session, a few hours before HUI/XAU's did, then put in a slightly higher double bottom cycle low and proceeded to do an Elliott Wave 12345 up down up down up pattern along with HUI/XAU, and, was in Wave 5 at session's end, 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==, so, some weakness early on Monday is likely. There could also be some Wave 5 follow through strength at the open obviously.
The decline from early yesterday until today's cycle lows (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==) was probably Wave 4 down of HUI/NEM/XAU's short term upcycle since 3-14-07 (Wave B of the major downcycle since 2-23-07 for HUI/XAU (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) and Wave 1 of a monthly upcycle for NEM).
In the very short term Wave 5 the expected NEM/XAU upside gap filling action should occur, as discussed in recent days. If NEM fills it's upside gap at 44.53 on Monday I may exit my long NEM/long NEM April 45 calls (NEMDI) before 45.10 gets filled, if it appears doubtful that it'll get filled. I'm inclined to have a quick trigger right now.
The WMT Lead Indicator became bearish versus the S & P 500 toward session's end, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, and, closed at a bearish -0.32% versus SPX today/on 3-23.
The NEM Lead Indicator became modestly more bearish (gap narrowed modestly) toward session's end, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem, and, closed at a neutral -0.01% versus the XAU today/on 3-23.
Thomson I Watch was bearish today for NEM (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=nem), for GFI (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=gfi), and, for WMT (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=wmt).
The COT data (http://www.cftc.gov/dea/options/deacmxsof.htm) points to strength accompanied by some weakness next week, because the savvy non contrarian gold Commercial Traders traded net long, while the clueless gold Speculators traded net short. The aggressive long liquidation by the savvy gold Commercial Traders points to some potentially severe weakness.
On the daily chart one can see that there are two spike cycle highs corresponding to very short term Wave 1 and 3 cycle highs, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=3m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==. Why Yahoo doesn't show the bar for the current day is beyond me, but, one can see the two spikes/very short term cycle highs.
The important weekly Fed Credit data released yesterday points to weakness in the 5 day period ending 3-28-07, because, Fed Credit fell -$468 Million in the 5 day period ending 3-21-07, see http://www.federalreserve.gov/releases/h41/Current/. The Rollover/Upside Surprise Barometer is at "Unlikely."
It looks like NEM will fill it's upside gap at 44.53 and possibly also 45.10 in the next few days, and, the XAU will probably fill it's upside gap at 139.66. Once NEM fills 45.10 I'll be looking to exit my long NEM/long NEM April 45 calls (NEMDI) positions.
One usually will exit trading positions shortly after gap filling action is completed, unless there are very good reasons for remaining in the position(s). Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles."
If it looks like the upside gap at 45.10 might not get filled until later I might exit before 45.10 gets filled. A trader should always be assessing the situation and should never be 100% sold on any scenario.
I bought NEM on 3-16 at 42.56, and, I bought NEM April 45 Calls (NEMDI) at a basis/average cost of 0.78, very close to 3-16's cycle lows at 42.51 and 0.75 (bought 40% of the contracts at 0.75 and 60% at 0.80), 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==.
In the countertrend Wave B since 3-14 NEM will probably fill upside gaps at 44.53, 45.10, and possibly also at 47.06, and, the XAU will probably fill upside gaps at 136.66 (filled 3-20) and 139.66, but not the one at 147.75, because it's a likely bearish breakaway gap to the downside, and, the XAU would exceed 2-23-07's minor intermediate term cycle high if it filled 147.75. 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= for the XAU's five day chart. So, watch NEM's upside gaps at 44.53, 45.10 (possibly also at 47.06), and, watch the XAU's upside gap at 139.66.
NEM/XAU have upside gaps at 44.53, 45.10, and at 47.06 for NEM, and, at 139.66, and at 147.75 for the XAU. NEM has downside gaps at 41.44 and 42.14, and, the XAU has downside gaps at 133.31 and 129.65. WMT has an upside gap at 49.98 and a downside gap at 46.21. I need to check WMT's historical data further to see if there are more gaps.
In the next few months HUI/XAU should decline 40-45%+ (from 2-23-07's minor intermediate term cycle highs) 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.
Annotated chart 1 at http://www.joefrocks.com/GoldStockCharts.html shows HUI as of 3-2-07 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). It's Wave C of Wave C for HUI, and Wave C of Wave C of Wave C for the XAU.
Note how the gold ETF GLD (and HUI/NEM/XAU) tracks SPX due to program trading, see http://finance.yahoo.com/q/ta?t=5d&s=GLD&l=off&z=l&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=&c=%5EGSPC. This shows how clueless the manipulation theory gold writers are. There simply aren't any traders who can overcome the huge program trading money, 70% of the dollar volume on the NYSE. Gold did 30-35%/year on average in it's Wave 1 Cyclical Bull Market from April 2001 until May 2006, yet many gold writers harp on gold price suppression by some "cartel."
Tuesday 2-27's Wave A crash was probably an important technical breakdown for HUI/XAU as well as for SPX (S & P 500), and, to a lesser extent for NEM, which should be in a Wave 3 Cyclical Bull Market since 10-4-06, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html. Tuesday 2-27's Wave A crash was probably an important technical breakdown for the stock market in general, meaning the major averages and nearly all sectors except a few defensive ones (despite what most gold "gurus" say gold isn't a safe haven/defensive sector, T Bills and T Bonds are, which run COUNTER to the precious metals sector, which does well in an inflationary rising interest rate environment).
Fed Credit is extremely important because it fuels index fund program traders, that account for about 70% of the dollar volume on the NYSE. Just look at what happened on Tuesday 2-27. THREE out of five hundred SPX components rose. Unreal.
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.
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
In the last few hours of the session HUI/XAU did an Elliott Wave 12345 up down up down up pattern, and, were in Wave 5 at session's end, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==, so, some weakness early on Monday is likely. There could also be some Wave 5 follow through strength at the open obviously.
Reliable lead indicator NEM's very short term Wave 4 bottomed early in the session, a few hours before HUI/XAU's did, then put in a slightly higher double bottom cycle low and proceeded to do an Elliott Wave 12345 up down up down up pattern along with HUI/XAU, and, was in Wave 5 at session's end, 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==, so, some weakness early on Monday is likely. There could also be some Wave 5 follow through strength at the open obviously.
The decline from early yesterday until today's cycle lows (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==) was probably Wave 4 down of HUI/NEM/XAU's short term upcycle since 3-14-07 (Wave B of the major downcycle since 2-23-07 for HUI/XAU (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) and Wave 1 of a monthly upcycle for NEM).
In the very short term Wave 5 the expected NEM/XAU upside gap filling action should occur, as discussed in recent days. If NEM fills it's upside gap at 44.53 on Monday I may exit my long NEM/long NEM April 45 calls (NEMDI) before 45.10 gets filled, if it appears doubtful that it'll get filled. I'm inclined to have a quick trigger right now.
The WMT Lead Indicator became bearish versus the S & P 500 toward session's end, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, and, closed at a bearish -0.32% versus SPX today/on 3-23.
The NEM Lead Indicator became modestly more bearish (gap narrowed modestly) toward session's end, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem, and, closed at a neutral -0.01% versus the XAU today/on 3-23.
Thomson I Watch was bearish today for NEM (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=nem), for GFI (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=gfi), and, for WMT (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=wmt).
The COT data (http://www.cftc.gov/dea/options/deacmxsof.htm) points to strength accompanied by some weakness next week, because the savvy non contrarian gold Commercial Traders traded net long, while the clueless gold Speculators traded net short. The aggressive long liquidation by the savvy gold Commercial Traders points to some potentially severe weakness.
On the daily chart one can see that there are two spike cycle highs corresponding to very short term Wave 1 and 3 cycle highs, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=3m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==. Why Yahoo doesn't show the bar for the current day is beyond me, but, one can see the two spikes/very short term cycle highs.
The important weekly Fed Credit data released yesterday points to weakness in the 5 day period ending 3-28-07, because, Fed Credit fell -$468 Million in the 5 day period ending 3-21-07, see http://www.federalreserve.gov/releases/h41/Current/. The Rollover/Upside Surprise Barometer is at "Unlikely."
It looks like NEM will fill it's upside gap at 44.53 and possibly also 45.10 in the next few days, and, the XAU will probably fill it's upside gap at 139.66. Once NEM fills 45.10 I'll be looking to exit my long NEM/long NEM April 45 calls (NEMDI) positions.
One usually will exit trading positions shortly after gap filling action is completed, unless there are very good reasons for remaining in the position(s). Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles."
If it looks like the upside gap at 45.10 might not get filled until later I might exit before 45.10 gets filled. A trader should always be assessing the situation and should never be 100% sold on any scenario.
I bought NEM on 3-16 at 42.56, and, I bought NEM April 45 Calls (NEMDI) at a basis/average cost of 0.78, very close to 3-16's cycle lows at 42.51 and 0.75 (bought 40% of the contracts at 0.75 and 60% at 0.80), 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==.
In the countertrend Wave B since 3-14 NEM will probably fill upside gaps at 44.53, 45.10, and possibly also at 47.06, and, the XAU will probably fill upside gaps at 136.66 (filled 3-20) and 139.66, but not the one at 147.75, because it's a likely bearish breakaway gap to the downside, and, the XAU would exceed 2-23-07's minor intermediate term cycle high if it filled 147.75. 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= for the XAU's five day chart. So, watch NEM's upside gaps at 44.53, 45.10 (possibly also at 47.06), and, watch the XAU's upside gap at 139.66.
NEM/XAU have upside gaps at 44.53, 45.10, and at 47.06 for NEM, and, at 139.66, and at 147.75 for the XAU. NEM has downside gaps at 41.44 and 42.14, and, the XAU has downside gaps at 133.31 and 129.65. WMT has an upside gap at 49.98 and a downside gap at 46.21. I need to check WMT's historical data further to see if there are more gaps.
In the next few months HUI/XAU should decline 40-45%+ (from 2-23-07's minor intermediate term cycle highs) 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.
Annotated chart 1 at http://www.joefrocks.com/GoldStockCharts.html shows HUI as of 3-2-07 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). It's Wave C of Wave C for HUI, and Wave C of Wave C of Wave C for the XAU.
Note how the gold ETF GLD (and HUI/NEM/XAU) tracks SPX due to program trading, see http://finance.yahoo.com/q/ta?t=5d&s=GLD&l=off&z=l&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=&c=%5EGSPC. This shows how clueless the manipulation theory gold writers are. There simply aren't any traders who can overcome the huge program trading money, 70% of the dollar volume on the NYSE. Gold did 30-35%/year on average in it's Wave 1 Cyclical Bull Market from April 2001 until May 2006, yet many gold writers harp on gold price suppression by some "cartel."
Tuesday 2-27's Wave A crash was probably an important technical breakdown for HUI/XAU as well as for SPX (S & P 500), and, to a lesser extent for NEM, which should be in a Wave 3 Cyclical Bull Market since 10-4-06, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html. Tuesday 2-27's Wave A crash was probably an important technical breakdown for the stock market in general, meaning the major averages and nearly all sectors except a few defensive ones (despite what most gold "gurus" say gold isn't a safe haven/defensive sector, T Bills and T Bonds are, which run COUNTER to the precious metals sector, which does well in an inflationary rising interest rate environment).
Fed Credit is extremely important because it fuels index fund program traders, that account for about 70% of the dollar volume on the NYSE. Just look at what happened on Tuesday 2-27. THREE out of five hundred SPX components rose. Unreal.
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.
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
1:16 PM
