Program Selling Due To Weak Housing Data
Reliable lead indicator NEM appears to have weathered the weak housing data selloff, see http://finance.yahoo.com/q/ta?s=NEM&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=.
On the daily chart, though today's candle doesn't show up, see http://finance.yahoo.com/q/ta?s=NEM&t=3m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=, NEM completed a short term Wave 1 Elliott Wave 12345 upcycle at 44+ on Thursday 3-22 for the monthly upcycle that began 3-14-07 (this just became obvious today), then has probably completed a Wave 2 ABC down up down very short term downcycle that appears to have bottomed today at 42.92. Keep in mind that NEM made a large bullish breakaway gap at 42.14 on 3-16, gapping up to 43.35.
This is a revision from what appeared to be a very short term Wave 5 having begun on Friday, which is good news, because NEM only bottomed modestly below Friday's cycle low, and, has probably entered a Wave 3 short term upcycle, in which 44.43, 45.10, and possibly also 47.06 will get filled. I feel better about the short term picture now that NEM has entered a short term Wave 3, plus the bullish breakaway gap at 42.14 from 3-16 is a great sign.
Thomson I Watch is very bullish so far today for NEM, which is a good sign, see http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?t=NEM&range=0&mgp=0&i=2&hdate=&x=6&y=5.
HUI/XAU probably entered a very short term Wave 5 on Friday, 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=, for the countertrend Wave B short term upcycle that began on 3-14-07, which is Wave B of the major downcycle since 2-23-07, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html.
What's interesting is how does NEM do a monthly upcycle while HUI/XAU should soon fall apart and enter Wave C of the major downcycle since 2-23-07? The answer is that NEM must act well and HUI/XAU must act poorly. Also, NEM is no longer the dominant component of the XAU, see http://www.phlx.com/products/sectors/xaucomp.htm. Both ABX and FCX have more influence on the XAU now, due to recent acquisitions.
The NEM/WMT Lead Indicators have improved some intraday, and, hopefully will continue to improve, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem and 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.
The important weekly Fed Credit data released yesterday points to weakness in the 5 day period ending 3-28-07, because, Fed Credit fell -$468 Million in the 5 day period ending 3-21-07, see http://www.federalreserve.gov/releases/h41/Current/. The Rollover/Upside Surprise Barometer is at "Unlikely."
It looks like NEM will fill it's upside gap at 44.53, 45.10, and 47.06 in the next few days, and, the XAU will probably fill it's upside gap at 139.66. Once NEM fills 45.10 and probably 47.06 now, I'll be looking to exit my long NEM/long NEM April 45 calls (NEMDI) positions.
One usually will exit trading positions shortly after gap filling action is completed, unless there are very good reasons for remaining in the position(s). Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles."
If it looks like the upside gap at 47.06 might not get filled until later I might exit before 47.06 gets filled. A trader should always be assessing the situation and should never be 100% sold on any scenario.
I bought NEM on 3-16 at 42.56, and, I bought NEM April 45 Calls (NEMDI) at a basis/average cost of 0.78, very close to 3-16's cycle lows at 42.51 and 0.75 (bought 40% of the contracts at 0.75 and 60% at 0.80), 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==.
In the countertrend Wave B since 3-14 NEM (NEM is in a monthly upcycle not a Wave B) will probably fill upside gaps at 44.53, 45.10, and possibly also at 47.06, and, the XAU will probably fill upside gaps at 136.66 (filled 3-20) and 139.66, but not the one at 147.75, because it's a likely bearish breakaway gap to the downside, and, the XAU would exceed 2-23-07's minor intermediate term cycle high if it filled 147.75. See http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c= for the XAU's five day chart. So, watch NEM's upside gaps at 44.53, 45.10, and at 47.06, and, watch the XAU's upside gap at 139.66.
NEM/XAU have upside gaps at 44.53, 45.10, and at 47.06 for NEM, and, at 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 133.31 and 129.65. WMT has an upside gap at 49.98 and a downside gap at 46.21. I need to check WMT's historical data further to see if there are more gaps.
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.
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.
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.
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
On the daily chart, though today's candle doesn't show up, see http://finance.yahoo.com/q/ta?s=NEM&t=3m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=, NEM completed a short term Wave 1 Elliott Wave 12345 upcycle at 44+ on Thursday 3-22 for the monthly upcycle that began 3-14-07 (this just became obvious today), then has probably completed a Wave 2 ABC down up down very short term downcycle that appears to have bottomed today at 42.92. Keep in mind that NEM made a large bullish breakaway gap at 42.14 on 3-16, gapping up to 43.35.
This is a revision from what appeared to be a very short term Wave 5 having begun on Friday, which is good news, because NEM only bottomed modestly below Friday's cycle low, and, has probably entered a Wave 3 short term upcycle, in which 44.43, 45.10, and possibly also 47.06 will get filled. I feel better about the short term picture now that NEM has entered a short term Wave 3, plus the bullish breakaway gap at 42.14 from 3-16 is a great sign.
Thomson I Watch is very bullish so far today for NEM, which is a good sign, see http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?t=NEM&range=0&mgp=0&i=2&hdate=&x=6&y=5.
HUI/XAU probably entered a very short term Wave 5 on Friday, 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=, for the countertrend Wave B short term upcycle that began on 3-14-07, which is Wave B of the major downcycle since 2-23-07, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html.
What's interesting is how does NEM do a monthly upcycle while HUI/XAU should soon fall apart and enter Wave C of the major downcycle since 2-23-07? The answer is that NEM must act well and HUI/XAU must act poorly. Also, NEM is no longer the dominant component of the XAU, see http://www.phlx.com/products/sectors/xaucomp.htm. Both ABX and FCX have more influence on the XAU now, due to recent acquisitions.
The NEM/WMT Lead Indicators have improved some intraday, and, hopefully will continue to improve, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem and 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.
The important weekly Fed Credit data released yesterday points to weakness in the 5 day period ending 3-28-07, because, Fed Credit fell -$468 Million in the 5 day period ending 3-21-07, see http://www.federalreserve.gov/releases/h41/Current/. The Rollover/Upside Surprise Barometer is at "Unlikely."
It looks like NEM will fill it's upside gap at 44.53, 45.10, and 47.06 in the next few days, and, the XAU will probably fill it's upside gap at 139.66. Once NEM fills 45.10 and probably 47.06 now, I'll be looking to exit my long NEM/long NEM April 45 calls (NEMDI) positions.
One usually will exit trading positions shortly after gap filling action is completed, unless there are very good reasons for remaining in the position(s). Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles."
If it looks like the upside gap at 47.06 might not get filled until later I might exit before 47.06 gets filled. A trader should always be assessing the situation and should never be 100% sold on any scenario.
I bought NEM on 3-16 at 42.56, and, I bought NEM April 45 Calls (NEMDI) at a basis/average cost of 0.78, very close to 3-16's cycle lows at 42.51 and 0.75 (bought 40% of the contracts at 0.75 and 60% at 0.80), 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==.
In the countertrend Wave B since 3-14 NEM (NEM is in a monthly upcycle not a Wave B) will probably fill upside gaps at 44.53, 45.10, and possibly also at 47.06, and, the XAU will probably fill upside gaps at 136.66 (filled 3-20) and 139.66, but not the one at 147.75, because it's a likely bearish breakaway gap to the downside, and, the XAU would exceed 2-23-07's minor intermediate term cycle high if it filled 147.75. See http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c= for the XAU's five day chart. So, watch NEM's upside gaps at 44.53, 45.10, and at 47.06, and, watch the XAU's upside gap at 139.66.
NEM/XAU have upside gaps at 44.53, 45.10, and at 47.06 for NEM, and, at 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 133.31 and 129.65. WMT has an upside gap at 49.98 and a downside gap at 46.21. I need to check WMT's historical data further to see if there are more gaps.
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.
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.
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.
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
7:42 AM
