.......The NEM/WMT Lead Indicators Are Bearish
The lead indicators in recent days have been mostly bearish, with the NEM Lead Indicator at a bearish -0.60% versus the XAU today/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 -1.03% versus the S & P 500 today/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 fact that both lead indicators were bearish today indicates that severe weakness is likely on Monday, and, NEM should fill it's downside gap at 41.83, also watch 41.09 and 40.83, and, the XAU should fill it's downside gap at 129.28.
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 peaked yesterday (XAU also, NEM on Wednesday, 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 next 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) very near gold's short term cycle low on Monday, 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'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.
Fed Credit for the five day period ending 3-7-07 declined -$1.710 Billion, which points to weakness the next five sessions, 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 at 1.50, and, I shorted some GDX (Gold Miners ETF) at 38.70 on Thursday.
The XAU has a downside gap at 129.28. NEM has downside gaps at 41.83, 41.09, and 40.83. 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 is the basis/crux of "Trade the Cycles."
It looks like NEM will/may fill all of it's downside gaps in the next few days, and, NEM's minor intermediate term downcycle since 2-22-07 (cycle high at 48.33) should bottom shortly after filling the last downside gap at 40.83 (at 40.50ish). 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 Wave 3 Cyclical Bull Market on 10-4-06.
A scenario I've discussed many times (but not recently) 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.
XAU has a bearish declining peaks chart pattern going back to 5-11-06 (HUI's is only slightly better), HUI/XAU are 35%ish above their primary Secular Bull Market trendlines, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. Basic technical analysis alone indicates a clearly bearish picture. Would you buy a stock with a declining peaks chart pattern going back 10 months??? Yet, most gold writers are (or were until recently) bullish??? Truth really is stranger than fiction.
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 fact that both lead indicators were bearish today indicates that severe weakness is likely on Monday, and, NEM should fill it's downside gap at 41.83, also watch 41.09 and 40.83, and, the XAU should fill it's downside gap at 129.28.
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 peaked yesterday (XAU also, NEM on Wednesday, 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 next 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) very near gold's short term cycle low on Monday, 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'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.
Fed Credit for the five day period ending 3-7-07 declined -$1.710 Billion, which points to weakness the next five sessions, 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 at 1.50, and, I shorted some GDX (Gold Miners ETF) at 38.70 on Thursday.
The XAU has a downside gap at 129.28. NEM has downside gaps at 41.83, 41.09, and 40.83. 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 is the basis/crux of "Trade the Cycles."
It looks like NEM will/may fill all of it's downside gaps in the next few days, and, NEM's minor intermediate term downcycle since 2-22-07 (cycle high at 48.33) should bottom shortly after filling the last downside gap at 40.83 (at 40.50ish). 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 Wave 3 Cyclical Bull Market on 10-4-06.
A scenario I've discussed many times (but not recently) 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.
XAU has a bearish declining peaks chart pattern going back to 5-11-06 (HUI's is only slightly better), HUI/XAU are 35%ish above their primary Secular Bull Market trendlines, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. Basic technical analysis alone indicates a clearly bearish picture. Would you buy a stock with a declining peaks chart pattern going back 10 months??? Yet, most gold writers are (or were until recently) bullish??? Truth really is stranger than fiction.
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
1:13 PM
