The HUI/NEM/XAU Short Term Scenario Is On Track
The XAU (and HUI/NEM) is in a very short term Wave C downcycle, that should bottom well below Friday's Wave A cycle low, 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==.
In the next few days the XAU should fill downside gaps at 133.31 and 129.65, and, NEM should fill downside gaps at 42.14 and 41.44. So, NEM should bottom at 41ish and the XAU should bottom at 129ish, then a very short term 1-2 day countertrend Wave B is likely to occur.
Fed Credit, which fuels the very important index fund program trading activity (about 70% of the dollar volume on the NYSE), rose $997 Million in the five day period ending 3-28-07, which points to a very sharp rally once HUI/NEM/XAU hit a short term cycle low in the next session or two, see http://www.federalreserve.gov/releases/h41/Current/. The Rollover/Upside Surprise Barometer is at "Likely," however, given the very bearish situation cyclewise and technically, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html, a major upside surprise is very unlikely in the next five sessions.
I bought XAU April 130 puts (XAVPF) yesterday at 1.20, and, will look to exit shortly after the gap filling action is completed in the next few days. I shorted GLD, the gold ETF, at 65.61 today, which will probably bottom at 63.50ish in the next few days, shortly after filling a downside gap at 63.98.
Since NEM probably hit an important monthly cycle low at 40.53 on 3-14-07 and an extremely important Wave 2 Cyclical Bear Market cycle low at 39.84 on 10-4-06, my NEM April 45 calls (NEMDI) position should do well.
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."
NEM/XAU have upside gaps at 43.73, 44.53, 45.10, and at 47.06 for NEM, and, at 139.18, 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 upside gaps at 47.49 and 49.98, and, a downside gap at 46.21. WMT made a bearish breakaway gap to the downside yesterday from 47.49.
The XAU hit a Wave B (began 3-14) cycle high on Thursday 3-22 (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 major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html), and, HUI did so on Monday (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==).
HUI/NEM/XAU are in a very short term Wave C downcycle. The XAU's upside gap from at 139.18 is a bearish breakaway gap to the downside. HUI/XAU are probably in the very bearish Wave C of the major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html). Watch the XAU's downside gaps at 133.31 and 129.65 and NEM's downside gaps at 42.14 and 41.44 as previously discussed.
The NEM Lead Indicator is very bearish short term, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem. The WMT Lead Indicator is very bearish short term, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC.
The NEM Lead Indicator was a modestly bearish -0.43% versus the XAU today/on 3-29, was a modestly bullish +0.28% versus the XAU on 3-28, a very bearish -1.06% versus the XAU yesterday, was bearish on Monday at -0.58%, and, was bearish last week at -1.90% versus the XAU (http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem). The WMT Lead Indicator was a modestly bearish -0.20% on 3-29, was a very bearish -1.09% versus the S & P 500 today/on 3-28, a slightly bearish -0.11% versus the S & P 500 on 3-27, and, was a modestly bearish -0.20% on 3-26.
Thomson I Watch was bearish today for NEM (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=NEM) and for GFI (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=GFI), but, was relatively bullish for WMT (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=WMT).
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 next few days the XAU should fill downside gaps at 133.31 and 129.65, and, NEM should fill downside gaps at 42.14 and 41.44. So, NEM should bottom at 41ish and the XAU should bottom at 129ish, then a very short term 1-2 day countertrend Wave B is likely to occur.
Fed Credit, which fuels the very important index fund program trading activity (about 70% of the dollar volume on the NYSE), rose $997 Million in the five day period ending 3-28-07, which points to a very sharp rally once HUI/NEM/XAU hit a short term cycle low in the next session or two, see http://www.federalreserve.gov/releases/h41/Current/. The Rollover/Upside Surprise Barometer is at "Likely," however, given the very bearish situation cyclewise and technically, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html, a major upside surprise is very unlikely in the next five sessions.
I bought XAU April 130 puts (XAVPF) yesterday at 1.20, and, will look to exit shortly after the gap filling action is completed in the next few days. I shorted GLD, the gold ETF, at 65.61 today, which will probably bottom at 63.50ish in the next few days, shortly after filling a downside gap at 63.98.
Since NEM probably hit an important monthly cycle low at 40.53 on 3-14-07 and an extremely important Wave 2 Cyclical Bear Market cycle low at 39.84 on 10-4-06, my NEM April 45 calls (NEMDI) position should do well.
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."
NEM/XAU have upside gaps at 43.73, 44.53, 45.10, and at 47.06 for NEM, and, at 139.18, 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 upside gaps at 47.49 and 49.98, and, a downside gap at 46.21. WMT made a bearish breakaway gap to the downside yesterday from 47.49.
The XAU hit a Wave B (began 3-14) cycle high on Thursday 3-22 (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 major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html), and, HUI did so on Monday (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==).
HUI/NEM/XAU are in a very short term Wave C downcycle. The XAU's upside gap from at 139.18 is a bearish breakaway gap to the downside. HUI/XAU are probably in the very bearish Wave C of the major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html). Watch the XAU's downside gaps at 133.31 and 129.65 and NEM's downside gaps at 42.14 and 41.44 as previously discussed.
The NEM Lead Indicator is very bearish short term, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem. The WMT Lead Indicator is very bearish short term, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC.
The NEM Lead Indicator was a modestly bearish -0.43% versus the XAU today/on 3-29, was a modestly bullish +0.28% versus the XAU on 3-28, a very bearish -1.06% versus the XAU yesterday, was bearish on Monday at -0.58%, and, was bearish last week at -1.90% versus the XAU (http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem). The WMT Lead Indicator was a modestly bearish -0.20% on 3-29, was a very bearish -1.09% versus the S & P 500 today/on 3-28, a slightly bearish -0.11% versus the S & P 500 on 3-27, and, was a modestly bearish -0.20% on 3-26.
Thomson I Watch was bearish today for NEM (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=NEM) and for GFI (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=GFI), but, was relatively bullish for WMT (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=WMT).
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
1:21 PM
