...........NEM/XAU Downside Gap Filling Action
Reliable lead indicator NEM filled it's downside gap at 41.83, and, the XAU filled it's downside gap at 129.28 today, thanks to severe weakness largely due to index fund program selling/S & P 500 weakness, see http://finance.yahoo.com/q/ta?t=1d&s=%5EHUI&l=off&z=l&q=l&a=m26-12-9&a=p12&a=fs&a=w14&c=wmt%2C+nem&c=%5EGSPC.
NEM will probably fill it's last downside gaps at 41.09 and 40.83 tomorrow, and, NEM 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.
The lead indicators turned positive toward session's end, see http://finance.yahoo.com/q/ta?t=1d&s=%5EHUI&l=off&z=l&q=l&a=m26-12-9&a=p12&a=fs&a=w14&c=wmt%2C+nem&c=%5EGSPC, and see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem, which means that there will/may probably be some short lived early strength tomorrow. The NEM Lead Indicator was a bullish +0.56% versus the XAU today, and, the WMT Lead Indicator was a bearish -0.25% versus the S & P 500 today.
Thomson I-Watch was bullish today for NEM (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=nem), GFI (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=gfi), and 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 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.
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."
Since hitting a Wave B of Wave A cycle high last Thursday HUI/XAU did a 2 day Wave A type decline, followed by a brief countertrend Wave B rebound yesterday, and, are in a Wave C decline that will bottom well below yesterday's Wave A cycle low at 326.50ish for HUI, 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 (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 today/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 today/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 (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 yesterday at 1 (so my average cost/basis is now 1.25), and, I shorted some GDX (Gold Miners ETF) at 38.70 on Thursday.
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
NEM will probably fill it's last downside gaps at 41.09 and 40.83 tomorrow, and, NEM 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.
The lead indicators turned positive toward session's end, see http://finance.yahoo.com/q/ta?t=1d&s=%5EHUI&l=off&z=l&q=l&a=m26-12-9&a=p12&a=fs&a=w14&c=wmt%2C+nem&c=%5EGSPC, and see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem, which means that there will/may probably be some short lived early strength tomorrow. The NEM Lead Indicator was a bullish +0.56% versus the XAU today, and, the WMT Lead Indicator was a bearish -0.25% versus the S & P 500 today.
Thomson I-Watch was bullish today for NEM (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=nem), GFI (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=gfi), and 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 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.
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."
Since hitting a Wave B of Wave A cycle high last Thursday HUI/XAU did a 2 day Wave A type decline, followed by a brief countertrend Wave B rebound yesterday, and, are in a Wave C decline that will bottom well below yesterday's Wave A cycle low at 326.50ish for HUI, 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 (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 today/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 today/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 (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 yesterday at 1 (so my average cost/basis is now 1.25), and, I shorted some GDX (Gold Miners ETF) at 38.70 on Thursday.
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
1:53 PM
