HUI/XAU Intermediate Term Upcycle Might Not Have Peaked
HUI/XAU's Intermediate Term Upcycle (HUI since 10-4-06, XAU since 3-14-07) might not have peaked late yesterday (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==), because, reliable lead indicator NEM made a higher short term Wave 3 cycle high today at 45.25, versus yesterday's cycle high at 45.11. NEM usually peaks ahead of HUI/XAU, so, HUI/XAU may take out yesterday's cycle highs tomorrow, which jives with a bullish NEM Lead Indicator at +0.57% versus the XAU today, and, with a neutral WMT Lead Indicator at +0.00% versus the S & P 500 today.
The NEM Lead Indicator became more bullish as the session progressed, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem. HUI/XAU might experience early weakness tomorrow, since they were in Wave C of an Elliott Wave ABC down up down downcycle since late yesterday at session's end, that might have more downside early tomorrow, 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==.
Thomson I Watch was bearish today for NEM (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=nem), for GFI (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=gfi), and for WMT (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=wmt).
NEM is in or should soon enter a Wave 4 short term downcycle of a monthly upcycle since 3-14-07 (cycle low at 40.53), and, filled it's upside gap at 45.10 yesterday.
Cycles indicate that a big decline is coming. HUI/XAU are 45%+ above their primary multi year trendlines (Secular Bull Market since late 2000), see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. There's no way in hell that HUI's super anemic uptrend of recent months is bullish, it's actually extremely flat lengthy rollover action since 12-5-06's cycle high. There's no way in hell that the XAU's downtrend since 5-11-06 (Wave 2 Cyclical Bear Market for HUI/XAU, Wave 2 down of the Secular Bull Market since late 2000) is bullish. Actually, the XAU managed to put in a slightly higher bearish double top cycle high at 148.50 yesterday versus the cycle high at 148.11 on 2-23-07. Big deal.
The savvy non contrarian gold Commercial Traders made an unusually large (> 10% increase in short position) short trade in the 5 day period ending 4-10-07 (http://www.cftc.gov/dea/options/deacmxsof.htm), which correctly pointed to strength last week, and, correctly pointed to some this week as well. The clueless gold Speculators went massively long, probably near an important cycle high.
In the next week or two the XAU should fill downside gaps at 143.58, 133.31 and possibly also at 129.65, and, NEM should fill it's downside gaps at 43.57 (filled), 43.45 (filled), 43.34, 42.89, and at 41.44. The XAU should bottom at 133ish or 129ish and NEM should bottom at 42.50ish or 41ish, shortly after filling 42.89 and maybe 41.44 (monthly cycle low at 40.53 occurred on 3-14-07).
Fed Credit (fuels index fund program traders) for the 5 day period ending 4-11-07 fell a sharp -$2.823 Billion (http://www.federalreserve.gov/releases/h41/Current/), so, the Rollover/Upside Surprise Barometer is at "Unlikely." The sharp drop in Fed Credit points to severe weakness for the 5 day period ending 4-18-07.
I bought XAU April 130 puts (XAVPF) on 3-28 at 1.20, and, I doubled up at 0.55 for an average cost/basis of 0.875, and, will look to exit in the next few days. I shorted GLD, the gold ETF, at 65.61 on 3-29, which will probably bottom at 63.50ish in the next few days, shortly after filling a downside gap at 63.98 (there are also downside gaps at 62.26 and 60.63). I sold all my NEM April 45 calls (NEMDI) at 0.50 versus a basis of 0.77.
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."
NEM has an upside gap at 47.06. NEM has downside gaps at 43.34, 42.89 and 41.44, and, the XAU has downside gaps at 143,58, 133.31 and 129.65. WMT has an upside gap at 49.98, and, a downside gap at 46.21.
In the next few months HUI/XAU should decline 45%+ (from 4-16-07's potential 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.
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."
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
The NEM Lead Indicator became more bullish as the session progressed, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem. HUI/XAU might experience early weakness tomorrow, since they were in Wave C of an Elliott Wave ABC down up down downcycle since late yesterday at session's end, that might have more downside early tomorrow, 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==.
Thomson I Watch was bearish today for NEM (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=nem), for GFI (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=gfi), and for WMT (http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?ticker=wmt).
NEM is in or should soon enter a Wave 4 short term downcycle of a monthly upcycle since 3-14-07 (cycle low at 40.53), and, filled it's upside gap at 45.10 yesterday.
Cycles indicate that a big decline is coming. HUI/XAU are 45%+ above their primary multi year trendlines (Secular Bull Market since late 2000), see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. There's no way in hell that HUI's super anemic uptrend of recent months is bullish, it's actually extremely flat lengthy rollover action since 12-5-06's cycle high. There's no way in hell that the XAU's downtrend since 5-11-06 (Wave 2 Cyclical Bear Market for HUI/XAU, Wave 2 down of the Secular Bull Market since late 2000) is bullish. Actually, the XAU managed to put in a slightly higher bearish double top cycle high at 148.50 yesterday versus the cycle high at 148.11 on 2-23-07. Big deal.
The savvy non contrarian gold Commercial Traders made an unusually large (> 10% increase in short position) short trade in the 5 day period ending 4-10-07 (http://www.cftc.gov/dea/options/deacmxsof.htm), which correctly pointed to strength last week, and, correctly pointed to some this week as well. The clueless gold Speculators went massively long, probably near an important cycle high.
In the next week or two the XAU should fill downside gaps at 143.58, 133.31 and possibly also at 129.65, and, NEM should fill it's downside gaps at 43.57 (filled), 43.45 (filled), 43.34, 42.89, and at 41.44. The XAU should bottom at 133ish or 129ish and NEM should bottom at 42.50ish or 41ish, shortly after filling 42.89 and maybe 41.44 (monthly cycle low at 40.53 occurred on 3-14-07).
Fed Credit (fuels index fund program traders) for the 5 day period ending 4-11-07 fell a sharp -$2.823 Billion (http://www.federalreserve.gov/releases/h41/Current/), so, the Rollover/Upside Surprise Barometer is at "Unlikely." The sharp drop in Fed Credit points to severe weakness for the 5 day period ending 4-18-07.
I bought XAU April 130 puts (XAVPF) on 3-28 at 1.20, and, I doubled up at 0.55 for an average cost/basis of 0.875, and, will look to exit in the next few days. I shorted GLD, the gold ETF, at 65.61 on 3-29, which will probably bottom at 63.50ish in the next few days, shortly after filling a downside gap at 63.98 (there are also downside gaps at 62.26 and 60.63). I sold all my NEM April 45 calls (NEMDI) at 0.50 versus a basis of 0.77.
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."
NEM has an upside gap at 47.06. NEM has downside gaps at 43.34, 42.89 and 41.44, and, the XAU has downside gaps at 143,58, 133.31 and 129.65. WMT has an upside gap at 49.98, and, a downside gap at 46.21.
In the next few months HUI/XAU should decline 45%+ (from 4-16-07's potential 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.
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."
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
1:19 PM
