HUI/XAU Wave B Is Peaking In Dramatic Rollover Mode
HUI/XAU's Wave B of the major downcycle since 2-23-07 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) is peaking (probably early today) in dramatic rollover mode, thanks in large part to the fact that Fed Credit, which fuels index fund program traders, rose $997 Million in the week ending 3-28-07, and, the Fed added a large $9.50 Billion 1 day repo today.
HUI appears to have peaked at 346.95 today versus at 346.55 on 3-26, which would be less than +0.12% above 346.55. The XAU filled it's upside gap at 139.66, which leaves the bearish breakaway gap at 147.75 being the last unfilled upside gap to be concerned with for now.
The NEM Lead Indicator is very bearish short term, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=off&z=l&q=c&p=&a=&c=%5Ehui,nem. The WMT Lead Indicator has been very bullish in recent days (http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=on&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC), but should turn bearish, since WMT filled it's upside gap at 47.49 yesterday.
In the next week or so the XAU should fill downside gaps at 133.31 and 129.65, and, NEM should fill it's downside gap at 41.44. The XAU should bottom at 129ish and NEM should bottom at 41ish, above the monthly cycle low at 40.53 that occurred on 3-14-07.
To show how clueless most gold writers are, have you heard anyone mention that HUI has a nearly perfect bearish double top on 12-5-06 and 2-23-07? See http://finance.yahoo.com/q/ta?s=%5EHUI&t=1y&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==. HUI has declining peaks up to 12-5-06 going back to 5-11-06's Wave 1 Cyclical Bull Market cycle high. The XAU has a bearish declining peaks pattern going back to 5-11-06's Wave 1 Cyclical Bull Market cycle high, see http://finance.yahoo.com/q/ta?s=%5Exau&t=1y&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. There's no way in hell that HUI's or the XAU's charts can be interpreted as bullish, yet most gold writers are bullish.
Add to this the fact that HUI and the XAU's primary multi year Secular Bull Market trendlines since late 2000 are at 200ish and 85ish (see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html) versus the current 346ish and 139ish, and it shows that most gold writers don't even understand basic technical analysis.
The COT data (http://www.cftc.gov/dea/options/deacmxsof.htm) for the five day period ending 3-27-07 points to potentially severe weakness accompanied by some strength this week, because the savvy non contrarian gold Commercial Traders traded significantly net short, while the clueless gold Speculators traded net long. The aggressive long liquidation by the savvy gold Commercial Traders the past two weeks ending 3-27-07 points to potentially severe weakness this week. The significant short covering by the savvy gold Commercial Traders in the five day period ending 3-27-07 points to some strength this week.
Fed Credit, which fuels the very important index fund program trading activity (about 70% of the dollar volume on the NYSE), rose $997 Million in the five day period ending 3-28-07, see http://www.federalreserve.gov/releases/h41/Current/. The Rollover/Upside Surprise Barometer is at "Mildly Likely," however, given the very bearish situation cyclewise and technically, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html, a major upside surprise is very unlikely in the five sessions ending 4-4-07.
I bought XAU April 130 puts (XAVPF) on 3-28 at 1.20, and, will look to exit shortly after the gap filling action is completed 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). Since NEM probably hit an important monthly cycle low at 40.53 on 3-14-07 and an extremely important Wave 2 Cyclical Bear Market cycle low at 39.84 on 10-4-06 (see chart 8 at http://www.joefrocks.com/GoldStockCharts.html), my NEM April 45 calls (NEMDI) position should do well.
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/XAU have upside gaps at 43.73, 44.53, 45.10, and at 47.06 for NEM, and, at 147.75 for the XAU. NEM has a downside gap at 41.44, 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.
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
HUI appears to have peaked at 346.95 today versus at 346.55 on 3-26, which would be less than +0.12% above 346.55. The XAU filled it's upside gap at 139.66, which leaves the bearish breakaway gap at 147.75 being the last unfilled upside gap to be concerned with for now.
The NEM Lead Indicator is very bearish short term, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=off&z=l&q=c&p=&a=&c=%5Ehui,nem. The WMT Lead Indicator has been very bullish in recent days (http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=on&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC), but should turn bearish, since WMT filled it's upside gap at 47.49 yesterday.
In the next week or so the XAU should fill downside gaps at 133.31 and 129.65, and, NEM should fill it's downside gap at 41.44. The XAU should bottom at 129ish and NEM should bottom at 41ish, above the monthly cycle low at 40.53 that occurred on 3-14-07.
To show how clueless most gold writers are, have you heard anyone mention that HUI has a nearly perfect bearish double top on 12-5-06 and 2-23-07? See http://finance.yahoo.com/q/ta?s=%5EHUI&t=1y&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==. HUI has declining peaks up to 12-5-06 going back to 5-11-06's Wave 1 Cyclical Bull Market cycle high. The XAU has a bearish declining peaks pattern going back to 5-11-06's Wave 1 Cyclical Bull Market cycle high, see http://finance.yahoo.com/q/ta?s=%5Exau&t=1y&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. There's no way in hell that HUI's or the XAU's charts can be interpreted as bullish, yet most gold writers are bullish.
Add to this the fact that HUI and the XAU's primary multi year Secular Bull Market trendlines since late 2000 are at 200ish and 85ish (see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html) versus the current 346ish and 139ish, and it shows that most gold writers don't even understand basic technical analysis.
The COT data (http://www.cftc.gov/dea/options/deacmxsof.htm) for the five day period ending 3-27-07 points to potentially severe weakness accompanied by some strength this week, because the savvy non contrarian gold Commercial Traders traded significantly net short, while the clueless gold Speculators traded net long. The aggressive long liquidation by the savvy gold Commercial Traders the past two weeks ending 3-27-07 points to potentially severe weakness this week. The significant short covering by the savvy gold Commercial Traders in the five day period ending 3-27-07 points to some strength this week.
Fed Credit, which fuels the very important index fund program trading activity (about 70% of the dollar volume on the NYSE), rose $997 Million in the five day period ending 3-28-07, see http://www.federalreserve.gov/releases/h41/Current/. The Rollover/Upside Surprise Barometer is at "Mildly Likely," however, given the very bearish situation cyclewise and technically, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html, a major upside surprise is very unlikely in the five sessions ending 4-4-07.
I bought XAU April 130 puts (XAVPF) on 3-28 at 1.20, and, will look to exit shortly after the gap filling action is completed 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). Since NEM probably hit an important monthly cycle low at 40.53 on 3-14-07 and an extremely important Wave 2 Cyclical Bear Market cycle low at 39.84 on 10-4-06 (see chart 8 at http://www.joefrocks.com/GoldStockCharts.html), my NEM April 45 calls (NEMDI) position should do well.
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/XAU have upside gaps at 43.73, 44.53, 45.10, and at 47.06 for NEM, and, at 147.75 for the XAU. NEM has a downside gap at 41.44, 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.
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
7:20 AM
