Bearish Action Points To The Possibility Of An Inverse Elliott Wave 12345 Pattern As Opposed To A Normal ABC Down Up Down Pattern
Bearish action points to a potential inverse Elliott Wave 12345 pattern (down up down up down) occurring during a downcycle, as opposed to the normal ABC down up down pattern experienced during downcycles. The fact that NEM failed to put in a higher cycle high in the short term Wave 3 of it's latest monthly upcycle (peaked in mid April) than the Wave 1 cycle high was a bearish sign that pointed to the possibility of an inverse Elliott Wave 12345 pattern occurring, as it has, with NEM taking out the cycle low at 40.90 from early May today that normally would have been a monthly cycle low, see http://stockcharts.com/charts/gallery.html?nem.
NEM also took out it's cycle low at 40.53 from mid March, which is surprising, but, fits with the HUI/XAU Wave 2 Cyclical Bear Market since 5-11-06, even though NEM's Wave 2 Cyclical Bear Market (started 1-31-06) probably ended at 39.84 on 10-4-06, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html.
NEM's multi year Secular Bull Market trendline since October 2000 is at 40ish right now, so, 40 better hold or mining stocks are in even deeper trouble than I thought. NEM appears to be in the process of bottoming (monthly downcycle)/completing an inverse Elliott Wave 12345 pattern (down up down up down), probably today.
Another example of bearish action portending the possibility of an inverse Elliott Wave 12345 pattern occurring was AVNR's recent huge plunge from a Wave 3 short term cycle high at 6.75 all the way to 3.17 on 4-26. That huge % decline was a sign that it would probably take a while for AVNR to exceed Wave 3's cycle high at 6.75, and, portended the possibility of an inverse Elliott Wave 12345 pattern occurring, as it has, see http://stockcharts.com/charts/gallery.html?avnr. AVNR appears to be in the process of bottoming (short term Wave 4)/completing an inverse Elliott Wave 12345 pattern (down up down up down), probably today.
My only problem with the Gallery View charts is that they're logarithmic, which isn't the real world. I use them because Yahoo's are a day behind.
I was looking to buy NEM and LMC early today, but, when NEM failed to fill today's upside gap at 41.60, and, because LMC made a huge bearish likely breakaway gap down at the open, I correctly held off on buying either one.
BQI is in a short term Wave 4 down. I might buy some today in the 3.10-3.20 range.
NGEN has fallen into the 1.60-1.70 range for the short term Wave 4 down, so, I may buy some today.
SUPG has fallen into the 6.15-6.40 range for the short term Wave 2 down, so, I may buy some today.
DNDN as expected filled it's downside gap at 5.22 today, and, may have hit a monthly cycle low at 5.17.
That's all for now.
The due diligence that I do (as a minimum) on trading stocks is to look at insider trading activity, the balance sheet, mutual fund/institutional ownership, scan the news/maybe read some, check I Watch, make sure that they're probably in a Cyclical Bull Market (should have completed a 9-18+ month Cyclical Bear Market in the past year or two), etc. I didn't see anything with any of the stocks listed in this post that scared me away.
There are times when one should wait for strength after hitting a price target (hit a buy signal), such as if there's a well established downtrend line one should wait for it to clearly be broken (might wait for a Wave 1 short term upcycle and buy late in a Wave 2 down or early in a Wave 3 up, in the flat early part of the cycle), and, there are times to consider trying to catch the bottom (when I Watch and the WMT Lead Indicator are clearly bullish and/or a stock bounces at a well established uptrend line, then look to buy a pullback).
If one decides to trade rockets obviously paper trade for a while or trade very modest positions at first.
I'll be using cycle trendlines/channels, Elliott Wave patterns, gaps, the WMT Lead Indicator, I Watch, etc. to time the rockets. If it works the way I think it will it should be a lot of fun. We'll see.
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. The primary Secular Bull Market trendlines since late 2000 are at 200-220 for HUI and at 85-90 for the XAU. Those are the targets for where the Cyclical Bear Market will bottom. 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 also took out it's cycle low at 40.53 from mid March, which is surprising, but, fits with the HUI/XAU Wave 2 Cyclical Bear Market since 5-11-06, even though NEM's Wave 2 Cyclical Bear Market (started 1-31-06) probably ended at 39.84 on 10-4-06, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html.
NEM's multi year Secular Bull Market trendline since October 2000 is at 40ish right now, so, 40 better hold or mining stocks are in even deeper trouble than I thought. NEM appears to be in the process of bottoming (monthly downcycle)/completing an inverse Elliott Wave 12345 pattern (down up down up down), probably today.
Another example of bearish action portending the possibility of an inverse Elliott Wave 12345 pattern occurring was AVNR's recent huge plunge from a Wave 3 short term cycle high at 6.75 all the way to 3.17 on 4-26. That huge % decline was a sign that it would probably take a while for AVNR to exceed Wave 3's cycle high at 6.75, and, portended the possibility of an inverse Elliott Wave 12345 pattern occurring, as it has, see http://stockcharts.com/charts/gallery.html?avnr. AVNR appears to be in the process of bottoming (short term Wave 4)/completing an inverse Elliott Wave 12345 pattern (down up down up down), probably today.
My only problem with the Gallery View charts is that they're logarithmic, which isn't the real world. I use them because Yahoo's are a day behind.
I was looking to buy NEM and LMC early today, but, when NEM failed to fill today's upside gap at 41.60, and, because LMC made a huge bearish likely breakaway gap down at the open, I correctly held off on buying either one.
BQI is in a short term Wave 4 down. I might buy some today in the 3.10-3.20 range.
NGEN has fallen into the 1.60-1.70 range for the short term Wave 4 down, so, I may buy some today.
SUPG has fallen into the 6.15-6.40 range for the short term Wave 2 down, so, I may buy some today.
DNDN as expected filled it's downside gap at 5.22 today, and, may have hit a monthly cycle low at 5.17.
That's all for now.
The due diligence that I do (as a minimum) on trading stocks is to look at insider trading activity, the balance sheet, mutual fund/institutional ownership, scan the news/maybe read some, check I Watch, make sure that they're probably in a Cyclical Bull Market (should have completed a 9-18+ month Cyclical Bear Market in the past year or two), etc. I didn't see anything with any of the stocks listed in this post that scared me away.
There are times when one should wait for strength after hitting a price target (hit a buy signal), such as if there's a well established downtrend line one should wait for it to clearly be broken (might wait for a Wave 1 short term upcycle and buy late in a Wave 2 down or early in a Wave 3 up, in the flat early part of the cycle), and, there are times to consider trying to catch the bottom (when I Watch and the WMT Lead Indicator are clearly bullish and/or a stock bounces at a well established uptrend line, then look to buy a pullback).
If one decides to trade rockets obviously paper trade for a while or trade very modest positions at first.
I'll be using cycle trendlines/channels, Elliott Wave patterns, gaps, the WMT Lead Indicator, I Watch, etc. to time the rockets. If it works the way I think it will it should be a lot of fun. We'll see.
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. The primary Secular Bull Market trendlines since late 2000 are at 200-220 for HUI and at 85-90 for the XAU. Those are the targets for where the Cyclical Bear Market will bottom. 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
10:29 AM
