Tuesday Might Be A "Doomsday" For Gold/Silver Bugs
Tuesday might be a "doomsday" for gold/silver bugs. First of all the NEM Lead Indicator was a very bearish -1.58% versus the XAU on Friday. The WMT Lead Indicator will probably turn bearish again, because WMT's very short term upcycle since late Wednesday appears to have peaked (or be peaking) (http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=), as discussed previously, and, the WMT Lead Indicator was a neutral +0.01% versus SPX on Friday.
Secondly, XAU Implied Volatility revealed a very sharp (3-6%) +3.88% rise in complacency on Friday that points to potentially severe weakness on Tuesday, because, XAU Implied Volatility fell -4.83% to 26.230 on 5-25 from 27.560 on 5-24 versus a +0.95% rise in the XAU, which is a very sharp +3.88% (3-6%) rise in complacency on Friday (XAU Implied Volatility fell -4.83% + +0.95% rise in the XAU = -3.88% decline in the XAU wall of worry = +3.88% rise in complacency on Friday).
Lastly, the XAU Put/Call Ratio has collapsed to 0.74408 on 5-25 for the June expiration from 1.09845 for the May expiration on 5-17 (the day before May expired), which reveals an extremely low fear/complacent market that points to substantial weakness this week.
Now for HUI's Elliott Wave count, see HUI's chart at http://stockcharts.com/charts/gallery.html?%24hui. HUI's major intermediate term upcycle that began on 10-4-06 peaked on 4-16-07 at 369.69 (The XAU peaked way back on 12-5-06). Wave A down bottomed at 333.37 on 5-1-07. Wave B peaked at 351.85 on 5-4-07. Wave A of Wave C bottomed at 319.56 on 5-17. Wave B of Wave C peaked at 334.43 on 5-21, so, Wave C of Wave C is in effect for HUI, in which it should bottom well below 319.56.
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.
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. 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 began on 1-31-06. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Secondly, XAU Implied Volatility revealed a very sharp (3-6%) +3.88% rise in complacency on Friday that points to potentially severe weakness on Tuesday, because, XAU Implied Volatility fell -4.83% to 26.230 on 5-25 from 27.560 on 5-24 versus a +0.95% rise in the XAU, which is a very sharp +3.88% (3-6%) rise in complacency on Friday (XAU Implied Volatility fell -4.83% + +0.95% rise in the XAU = -3.88% decline in the XAU wall of worry = +3.88% rise in complacency on Friday).
Lastly, the XAU Put/Call Ratio has collapsed to 0.74408 on 5-25 for the June expiration from 1.09845 for the May expiration on 5-17 (the day before May expired), which reveals an extremely low fear/complacent market that points to substantial weakness this week.
Now for HUI's Elliott Wave count, see HUI's chart at http://stockcharts.com/charts/gallery.html?%24hui. HUI's major intermediate term upcycle that began on 10-4-06 peaked on 4-16-07 at 369.69 (The XAU peaked way back on 12-5-06). Wave A down bottomed at 333.37 on 5-1-07. Wave B peaked at 351.85 on 5-4-07. Wave A of Wave C bottomed at 319.56 on 5-17. Wave B of Wave C peaked at 334.43 on 5-21, so, Wave C of Wave C is in effect for HUI, in which it should bottom well below 319.56.
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.
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. 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 began on 1-31-06. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
1:46 PM
