.......HUI/XAU's Wave A May Not Have Bottomed Today
HUI/XAU's Wave A of their major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) may not have bottomed yet. The lead indicators today, at a bearish -0.81% versus the XAU for the NEM Lead Indicator, and, at an extremely bearish -1.17% versus the S & P 500 for the WMT Lead Indicator, suggest that a test of today's cycle lows is likely tomorrow. Also, the fact that HUI's cycle low at 311.78 today was only modestly lower than the Wave A of Wave A cycle low at 313+ that occurred in early March, indicates that a significantly lower cycle low may occur tomorrow.
That being said I'm happy that I covered GDX (Gold Miners ETF) at 36.70 versus a short sale/entry point at 38.70, and, I sold the XAU April 120 puts (XAVPD) at 1.95 versus a basis of 1.25, so, I did well.
Reliable lead indicator NEM is more likely to have bottomed today at 40.53, very close to the 40-40.50 target range, and, filled the last of it's downside gaps at 41.09 and 40.83 today, and, may have hit a minor intermediate term cycle low (minor intermediate term downcycle since 2-22-07 (cycle high at 48.33)).
10-4-06's cycle low at 39.84 should hold, because NEM bounced right at it's primary Secular Bull Market trendline in effect since October 2000, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, and, hit a 5% follow through major buy signal, indicating that reliable lead indicator NEM probably entered a 5-6 year Wave 3 Cyclical Bull Market on 10-4-06.
HUI's Wave A of Wave A of it's major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) bottomed at 313+ in early March, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=6m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==, so, this current Wave C of Wave A, if it's still in effect, may bottom well below 313+ at 300ish, which implies that tomorrow HUI/XAU may still have a sharp decline ahead of them.
NEM/XAU have upside gaps at 44.53, 45.10, and at 47.06 for NEM, and, at 136.66, 139.66, and at 147.75 for the XAU. Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles."
The NEM Lead Indicator was a bullish +0.56% versus the XAU yesterday, and, the WMT Lead Indicator was a bearish -0.25% versus the S & P 500 yesterday.
Thomson I-Watch was somewhat bearish today for NEM (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=nem), and, was bearish today for GFI (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=gfi), but, was very bullish today for WMT (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=wmt). HUI/XAU's Wave A down of their major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) may have bottomed today or might do so tomorrow.
A scenario I've discussed many times before is that HUI/XAU's Wave A down of their major downcycle since 2-23-07 should closely coincide with NEM's minor intermediate term cycle low at 40.50ish. Then the Wave B should closely coincide with Wave 1 of a new NEM minor intermediate term upcycle, followed by the final Wave C of HUI/XAU's major downcycle since 2-23-07 probably closely coinciding with Wave 2 down of a new NEM minor intermediate term upcycle.
Since hitting a Wave B of Wave A cycle high last Thursday 3-8 HUI/XAU did a 2 day Wave A type decline, followed by a brief countertrend Wave B rebound on 3-12, and, are/were in a Wave C type decline that should bottom today or tomorrow, 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==.
Wave C of Wave A of HUI/XAU's major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) began last Thursday 3-8 (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, may have bottomed.
The lead indicators in recent days have been mostly bearish, with the NEM Lead Indicator at a bearish -0.81% versus the XAU on 3-14, a bullish +0.56% versus the XAU on 3-13, a neutral +0.02% versus the XAU on 3-12, a bearish -0.60% versus the XAU on 3-9,+0.03% versus the XAU on 3-8, a bearish -0.74% on 3-7, and, a very bearish -1.25% on 3-6, and, with the WMT Lead Indicator at a very bearish -1.17% versus the S & P 500 on 3-14, a bearish -0.25% versus the S & P 500 on 3-13, a very bearish -0.61% versus the S & P 500 on 3-12, a very bearish -1.03% versus the S & P 500 on 3-9, a very bearish -0.81% versus the S & P 500 on 3-8, +0.02% on 3-7, and, a bearish -0.35% on 3-6.
The Elliott Wave count is/was Wave C of Wave A of HUI/XAU's major downcycle since 2-23-07, and, Wave C of reliable lead indicator NEM's minor intermediate term downcycle since 2-22-07. In HUI's 3 month chart one can see that the countertrend Wave B of Wave A peaked Thursday 3-8 (XAU also, NEM on Wednesday 3-7, leading as usual), 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==.
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.
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
That being said I'm happy that I covered GDX (Gold Miners ETF) at 36.70 versus a short sale/entry point at 38.70, and, I sold the XAU April 120 puts (XAVPD) at 1.95 versus a basis of 1.25, so, I did well.
Reliable lead indicator NEM is more likely to have bottomed today at 40.53, very close to the 40-40.50 target range, and, filled the last of it's downside gaps at 41.09 and 40.83 today, and, may have hit a minor intermediate term cycle low (minor intermediate term downcycle since 2-22-07 (cycle high at 48.33)).
10-4-06's cycle low at 39.84 should hold, because NEM bounced right at it's primary Secular Bull Market trendline in effect since October 2000, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, and, hit a 5% follow through major buy signal, indicating that reliable lead indicator NEM probably entered a 5-6 year Wave 3 Cyclical Bull Market on 10-4-06.
HUI's Wave A of Wave A of it's major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) bottomed at 313+ in early March, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=6m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==, so, this current Wave C of Wave A, if it's still in effect, may bottom well below 313+ at 300ish, which implies that tomorrow HUI/XAU may still have a sharp decline ahead of them.
NEM/XAU have upside gaps at 44.53, 45.10, and at 47.06 for NEM, and, at 136.66, 139.66, and at 147.75 for the XAU. Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles."
The NEM Lead Indicator was a bullish +0.56% versus the XAU yesterday, and, the WMT Lead Indicator was a bearish -0.25% versus the S & P 500 yesterday.
Thomson I-Watch was somewhat bearish today for NEM (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=nem), and, was bearish today for GFI (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=gfi), but, was very bullish today for WMT (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=wmt). HUI/XAU's Wave A down of their major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) may have bottomed today or might do so tomorrow.
A scenario I've discussed many times before is that HUI/XAU's Wave A down of their major downcycle since 2-23-07 should closely coincide with NEM's minor intermediate term cycle low at 40.50ish. Then the Wave B should closely coincide with Wave 1 of a new NEM minor intermediate term upcycle, followed by the final Wave C of HUI/XAU's major downcycle since 2-23-07 probably closely coinciding with Wave 2 down of a new NEM minor intermediate term upcycle.
Since hitting a Wave B of Wave A cycle high last Thursday 3-8 HUI/XAU did a 2 day Wave A type decline, followed by a brief countertrend Wave B rebound on 3-12, and, are/were in a Wave C type decline that should bottom today or tomorrow, 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==.
Wave C of Wave A of HUI/XAU's major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) began last Thursday 3-8 (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, may have bottomed.
The lead indicators in recent days have been mostly bearish, with the NEM Lead Indicator at a bearish -0.81% versus the XAU on 3-14, a bullish +0.56% versus the XAU on 3-13, a neutral +0.02% versus the XAU on 3-12, a bearish -0.60% versus the XAU on 3-9,+0.03% versus the XAU on 3-8, a bearish -0.74% on 3-7, and, a very bearish -1.25% on 3-6, and, with the WMT Lead Indicator at a very bearish -1.17% versus the S & P 500 on 3-14, a bearish -0.25% versus the S & P 500 on 3-13, a very bearish -0.61% versus the S & P 500 on 3-12, a very bearish -1.03% versus the S & P 500 on 3-9, a very bearish -0.81% versus the S & P 500 on 3-8, +0.02% on 3-7, and, a bearish -0.35% on 3-6.
The Elliott Wave count is/was Wave C of Wave A of HUI/XAU's major downcycle since 2-23-07, and, Wave C of reliable lead indicator NEM's minor intermediate term downcycle since 2-22-07. In HUI's 3 month chart one can see that the countertrend Wave B of Wave A peaked Thursday 3-8 (XAU also, NEM on Wednesday 3-7, leading as usual), 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==.
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.
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
1:19 PM
