A Very Short Term Countertrend Wave B Began Yesterday For HUI/XAU/NEM
A very short term countertrend Wave B began yesterday for HUI/XAU/NEM, in which they're spending little time trending up, which is obviously a bearish sign, 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 early strength was Wave 1 of a very short term Wave B countertrend rebound. Today's brief spike at the open was Wave 3. There will probably be one more "pop"/brief rally corresponding to Wave 5 either today or tomorrow, in which it'll probably be time to consider getting one's shorts on.
XAU Implied Volatility revealed one of the largest one day spikes in fear I've ever seen, rising +48.28% to 41.280 on 3-5 from 27.840 on 3-2, which points to substantial weakness in the near future, because it's an unusually large (> 6%) rise in fear that portends weakness in the near future.
NEM created a downside gap at today's open at 42.48 and the XAU created one at 129.28. NEM also has downside gaps at 41.83, 41.09, and 40.83.
NEM/XAU have upside gaps at 44.53 and 45.10 for NEM (also at 47.06), and, at 136.66 and 139.66 for the XAU (also at 147.75). It now appears unlikely that they will get filled in this very short term countertrend Wave B upcycle. NEM's upside gap at 47.06 and the XAU 's upside gap at 147.75 should be bearish breakaway gaps to the downside that won't get filled until later on, but, since reliable lead indicator NEM probably began a Wave 3 Cyclical Bull Market on 10-4-06, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, if there is an upside surprise, it should be by NEM.
Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps is the basis/crux of "Trade the Cycles."
The NEM Lead Indicator is a very bearish -1.05% vs the XAU right now. Large spikes like today's large HUI/XAU spike tend to occur near important cycle highs. It doesn't look like I'll be trading long this week.
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).
The Fed added an above average $7.75 Billion in credit today, an above average $7.50 Billion in credit yesterday, an average sized $5 Billion in credit on Friday, a massive $17.75 Billion in credit on Thursday (punch spiking Thursday) after Wednesday's unusually large (for any day but Thursday) $17.25 Billion, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.
The Fed's weekly data released Thursday (http://www.federalreserve.gov/releases/h41/Current/) indicates that credit rose +$1.75 Billion in the week ending 2-28-07, much less than I thought it would. They show $36.286 in Repos for the week ending 2-28-07, which doesn't jive with $17.25 Billion + $8 Billion + $9.50 Billion + $5.50 Billion + $23.75 Billion = $64 Billion for the five days (http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE). I obviously need to find out why there is such a huge difference between the two totals.
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. That's a lot of Wave Cs!
HUI/XAU are in a very bearish major Wave C decline, the one year NEM Lead Indicator is very bearish (http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem), the COT (Commitments Of Traders) data has been very bearish the past 7-8 weeks, Lycos Thomson I Watch has been bearish for most of the past 3 weeks (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?t=NEM&range=0&mgp=0&i=2&hdate=&x=9&y=9), the 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 over 9 months??? Yet, most gold writers are (or were until recently) bullish??? Truth really is stranger than fiction.
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.
HUI and the XAU peaked Friday 2-23. The 1 day lag between when NEM and HUI/XAU peaked is a sign that an important cycle high occurred. In the new HUI chart I did the Elliott Wave count indicated that an important peak was imminent, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html.
Massive index fund program trader buying (fueled by Fed Credit) led to much of the strength in the upcycle that began 1-10-07 and peaked on 2-23-07, propping up SPX/HUI/NEM/XAU (led to a great deal of deceptive rollover action).
HUI is in Wave C of Wave C of the Wave 2 Cyclical Bear Market since 5-11-06 (The XAU is in Wave C of Wave C of Wave C). In the next few months HUI/XAU should do exactly what reliable lead indicator NEM has already done, which is to decline to their primary multi-year Secular Bull Market/very long term upcycle trendlines, currently at 200-220ish (could turn up which is why there's a wide range) for HUI and at 85-90ish for the XAU, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. NEM did a Wave A down, a Wave B up, then it's Wave C did an ABC down up down pattern, which is exactly what HUI/XAU appear to be doing, with Wave C of Wave C probably having begun Friday 2-23 for HUI (12-5-06 for the XAU), when minor intermediate term cycle highs occurred, see charts three and four at http://www.joefrocks.com/GoldStockCharts.html.
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. The vast majority of gold writers couldn't time their way out of a paper bag. They tend to be terrible.
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
XAU Implied Volatility revealed one of the largest one day spikes in fear I've ever seen, rising +48.28% to 41.280 on 3-5 from 27.840 on 3-2, which points to substantial weakness in the near future, because it's an unusually large (> 6%) rise in fear that portends weakness in the near future.
NEM created a downside gap at today's open at 42.48 and the XAU created one at 129.28. NEM also has downside gaps at 41.83, 41.09, and 40.83.
NEM/XAU have upside gaps at 44.53 and 45.10 for NEM (also at 47.06), and, at 136.66 and 139.66 for the XAU (also at 147.75). It now appears unlikely that they will get filled in this very short term countertrend Wave B upcycle. NEM's upside gap at 47.06 and the XAU 's upside gap at 147.75 should be bearish breakaway gaps to the downside that won't get filled until later on, but, since reliable lead indicator NEM probably began a Wave 3 Cyclical Bull Market on 10-4-06, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, if there is an upside surprise, it should be by NEM.
Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps is the basis/crux of "Trade the Cycles."
The NEM Lead Indicator is a very bearish -1.05% vs the XAU right now. Large spikes like today's large HUI/XAU spike tend to occur near important cycle highs. It doesn't look like I'll be trading long this week.
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).
The Fed added an above average $7.75 Billion in credit today, an above average $7.50 Billion in credit yesterday, an average sized $5 Billion in credit on Friday, a massive $17.75 Billion in credit on Thursday (punch spiking Thursday) after Wednesday's unusually large (for any day but Thursday) $17.25 Billion, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.
The Fed's weekly data released Thursday (http://www.federalreserve.gov/releases/h41/Current/) indicates that credit rose +$1.75 Billion in the week ending 2-28-07, much less than I thought it would. They show $36.286 in Repos for the week ending 2-28-07, which doesn't jive with $17.25 Billion + $8 Billion + $9.50 Billion + $5.50 Billion + $23.75 Billion = $64 Billion for the five days (http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE). I obviously need to find out why there is such a huge difference between the two totals.
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. That's a lot of Wave Cs!
HUI/XAU are in a very bearish major Wave C decline, the one year NEM Lead Indicator is very bearish (http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem), the COT (Commitments Of Traders) data has been very bearish the past 7-8 weeks, Lycos Thomson I Watch has been bearish for most of the past 3 weeks (http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?t=NEM&range=0&mgp=0&i=2&hdate=&x=9&y=9), the 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 over 9 months??? Yet, most gold writers are (or were until recently) bullish??? Truth really is stranger than fiction.
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.
HUI and the XAU peaked Friday 2-23. The 1 day lag between when NEM and HUI/XAU peaked is a sign that an important cycle high occurred. In the new HUI chart I did the Elliott Wave count indicated that an important peak was imminent, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html.
Massive index fund program trader buying (fueled by Fed Credit) led to much of the strength in the upcycle that began 1-10-07 and peaked on 2-23-07, propping up SPX/HUI/NEM/XAU (led to a great deal of deceptive rollover action).
HUI is in Wave C of Wave C of the Wave 2 Cyclical Bear Market since 5-11-06 (The XAU is in Wave C of Wave C of Wave C). In the next few months HUI/XAU should do exactly what reliable lead indicator NEM has already done, which is to decline to their primary multi-year Secular Bull Market/very long term upcycle trendlines, currently at 200-220ish (could turn up which is why there's a wide range) for HUI and at 85-90ish for the XAU, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. NEM did a Wave A down, a Wave B up, then it's Wave C did an ABC down up down pattern, which is exactly what HUI/XAU appear to be doing, with Wave C of Wave C probably having begun Friday 2-23 for HUI (12-5-06 for the XAU), when minor intermediate term cycle highs occurred, see charts three and four at http://www.joefrocks.com/GoldStockCharts.html.
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. The vast majority of gold writers couldn't time their way out of a paper bag. They tend to be terrible.
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
8:06 AM
