NEM Experienced A Likely Bullish Breakaway Gap Today
Reliable lead indicator NEM experienced a large likely bullish breakaway gap today, opening at 43.35 versus yesterday's close at 42.14, 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==. NEM hit a likely minor intermediate term cycle low at 40.53 on Wednesday 3-14, and, HUI/XAU's Wave A down of their major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) probably bottomed on Wednesday, about 35 minutes after reliable lead indicator NEM did. That lag time is a sign that an important cycle low probably occurred.
The lead indicators are bullish, which is another sign that HUI/XAU entered a short term countertrend Wave B. The NEM Lead Indicator is a very bullish +1.00% versus the XAU right now, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem, and, the WMT Lead Indicator is a bullish +0.40% versus the S & P 500 (SPX) right now, 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.
NEM and HUI/XAU bottomed shortly after the last of the downside gaps (NEM's at 40.83) got filled (about an hour or less later HUI/XAU bottomed), which is why cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles." I exited my GDX short position (at 36.70)/long XAU put position within about an hour of the HUI/XAU Wave A cycle low on Wednesday.
It's very important to exit short positions shortly after downside gap filling action is completed, unless the NEM/WMT lead indicators are very bearish. You'd have to have a very good reason for remaining short after downside gap filling action is completed. The converse is obviously true for exiting long positions after upside gap filling action is completed.
HUI/XAU are in Wave 3 of the short term countertrend Wave B (began 3-14) of the major downcycle since 2-23-07, 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=. Yesterday's downtrend for most of the session was Wave 2 down of the short term countertrend Wave B.
A glaring clue that this short term upcycle is a countertrend one is the vertical nature (a "spike move") of this rally/Wave B that began mid session on Wednesday. There's almost always relatively flat action for a few hours after an important cycle low or cycle high occurs (Wednesday's cycle lows were probably only important short term ones for HUI/XAU), and, that didn't happen on Wednesday. A great shorting/put buying opportunity probably approaches.
NEM should dramatically outperform HUI/XAU the next few weeks/months, since NEM hit a Wave 2 Cyclical Bear Market cycle low at 39.84 on 10-4-06 (see chart 8 at http://www.joefrocks.com/GoldStockCharts.html), entering a likely 5-6 year Wave 3 Cyclical Bull Market, and, hit a likely minor intermediate term cycle low at 40.53 on Wednesday 3-14. HUI/XAU on the other hand 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.
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. NEM has downside gaps at 41.44 and 42.14, and, the XAU has downside gaps at 129.65 and at 132.54.
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 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
The lead indicators are bullish, which is another sign that HUI/XAU entered a short term countertrend Wave B. The NEM Lead Indicator is a very bullish +1.00% versus the XAU right now, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem, and, the WMT Lead Indicator is a bullish +0.40% versus the S & P 500 (SPX) right now, 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.
NEM and HUI/XAU bottomed shortly after the last of the downside gaps (NEM's at 40.83) got filled (about an hour or less later HUI/XAU bottomed), which is why cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles." I exited my GDX short position (at 36.70)/long XAU put position within about an hour of the HUI/XAU Wave A cycle low on Wednesday.
It's very important to exit short positions shortly after downside gap filling action is completed, unless the NEM/WMT lead indicators are very bearish. You'd have to have a very good reason for remaining short after downside gap filling action is completed. The converse is obviously true for exiting long positions after upside gap filling action is completed.
HUI/XAU are in Wave 3 of the short term countertrend Wave B (began 3-14) of the major downcycle since 2-23-07, 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=. Yesterday's downtrend for most of the session was Wave 2 down of the short term countertrend Wave B.
A glaring clue that this short term upcycle is a countertrend one is the vertical nature (a "spike move") of this rally/Wave B that began mid session on Wednesday. There's almost always relatively flat action for a few hours after an important cycle low or cycle high occurs (Wednesday's cycle lows were probably only important short term ones for HUI/XAU), and, that didn't happen on Wednesday. A great shorting/put buying opportunity probably approaches.
NEM should dramatically outperform HUI/XAU the next few weeks/months, since NEM hit a Wave 2 Cyclical Bear Market cycle low at 39.84 on 10-4-06 (see chart 8 at http://www.joefrocks.com/GoldStockCharts.html), entering a likely 5-6 year Wave 3 Cyclical Bull Market, and, hit a likely minor intermediate term cycle low at 40.53 on Wednesday 3-14. HUI/XAU on the other hand 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.
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. NEM has downside gaps at 41.44 and 42.14, and, the XAU has downside gaps at 129.65 and at 132.54.
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 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
7:02 AM
