..............NEM/ Downside Gap Filling Action
Reliable lead indicator NEM filled it's downside gap at 41.09 early today, and, should fill it's last downside gap at 40.83 today, and, should hit a minor intermediate term cycle low in the 40 to 40.50 range, shortly after filling the last downside gap at 40.83 (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 should bottom well below 313+ at 300ish, which implies that by the end of the session or 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. They are bearish right now, see the intraday NEM Lead Indicator at http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem, and, see the intraday WMT Lead Indicator at 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.
Thomson I-Watch is bearish so far 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, is bullish so far 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 bottom today or 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 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, has obviously entered the parabolic/sharply declining part of the downcycle.
The lead indicators in recent days have been mostly bearish, with the NEM Lead Indicator at 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 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 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==.
The COT (Commitments Of Traders) data points to gold weakness this week, since the savvy non contrarian gold Commercial Traders engaged in an unusually large (> 10% decrease in short position) degree of short covering (points to weakness) near gold's short term cycle low on Monday 3-5, while the clueless gold Speculators lost their nerve in a very big way, engaging in an unusually large (> 10% decrease in long position) degree of long liquidation near Monday 3-5's short term cycle low, see the last data at http://www.cftc.gov/dea/options/deacmxsof.htm.
The savvy gold Commercial Traders went massively net short for 7-8 weeks (mostly short selling) or more as gold rose to $690ish, then they covered near Monday's cycle low below $640, as gold plunged more than $50, while the clueless gold Speculators went massively net long for 7-8 weeks or more (mostly adding to their long position) and ended up selling near $640. The savvy gold Commercial Traders nailed it, while the hapless gold Speculators (including some "well known" gold writers) got their butts whupped in a very big way. It's no wonder some of the "well known" gold writers don't like the COT data, because it shows just how badly they're getting whupped.
Fed Credit (fuels program trading) for the five day period ending 3-7-07 declined -$1.710 Billion, which points to weakness the next five sessions ending 3-14-07, see http://www.federalreserve.gov/releases/h41/Current/. The Rollover/Upside Surprise Barometer is at "unlikely."
I bought some April 120 XAU puts (XAVPD) on Wednesday 3-7 at 1.50 and I doubled up on 3-12 at 1 (so my average cost/basis is now 1.25), and, I shorted some GDX (Gold Miners ETF) at 38.70 on Thursday 3-8.
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.
Annotated new 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.
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
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 should bottom well below 313+ at 300ish, which implies that by the end of the session or 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. They are bearish right now, see the intraday NEM Lead Indicator at http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem, and, see the intraday WMT Lead Indicator at 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.
Thomson I-Watch is bearish so far 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, is bullish so far 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 bottom today or 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 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, has obviously entered the parabolic/sharply declining part of the downcycle.
The lead indicators in recent days have been mostly bearish, with the NEM Lead Indicator at 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 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 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==.
The COT (Commitments Of Traders) data points to gold weakness this week, since the savvy non contrarian gold Commercial Traders engaged in an unusually large (> 10% decrease in short position) degree of short covering (points to weakness) near gold's short term cycle low on Monday 3-5, while the clueless gold Speculators lost their nerve in a very big way, engaging in an unusually large (> 10% decrease in long position) degree of long liquidation near Monday 3-5's short term cycle low, see the last data at http://www.cftc.gov/dea/options/deacmxsof.htm.
The savvy gold Commercial Traders went massively net short for 7-8 weeks (mostly short selling) or more as gold rose to $690ish, then they covered near Monday's cycle low below $640, as gold plunged more than $50, while the clueless gold Speculators went massively net long for 7-8 weeks or more (mostly adding to their long position) and ended up selling near $640. The savvy gold Commercial Traders nailed it, while the hapless gold Speculators (including some "well known" gold writers) got their butts whupped in a very big way. It's no wonder some of the "well known" gold writers don't like the COT data, because it shows just how badly they're getting whupped.
Fed Credit (fuels program trading) for the five day period ending 3-7-07 declined -$1.710 Billion, which points to weakness the next five sessions ending 3-14-07, see http://www.federalreserve.gov/releases/h41/Current/. The Rollover/Upside Surprise Barometer is at "unlikely."
I bought some April 120 XAU puts (XAVPD) on Wednesday 3-7 at 1.50 and I doubled up on 3-12 at 1 (so my average cost/basis is now 1.25), and, I shorted some GDX (Gold Miners ETF) at 38.70 on Thursday 3-8.
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.
Annotated new 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.
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
7:38 AM
