The WMT/NEM Lead Indicators Turned Bullish Toward Session's End
NEM continued to test primary multi year support in the 40 area (see chart 8 at http://www.joefrocks.com/GoldStockCharts.html), with a cycle low at 40.10 today.
As discussed in today's first post (http://tradethecycles.blogspot.com/2007/05/avnr-probably-put-in-monthly-cycle-low.html), AVNR just put in a bullish double bottom monthly cycle low at 2.36 yesterday and today, closing dramatically higher at 2.83, +17.92%, on very strong volume of over 7.3 million shares, see http://stockcharts.com/charts/gallery.html?avnr.
AVNR's short term Wave 1 peaked at 3.03 at mid session, then it did a short term Wave 2 down to 2.73, and, probably ended the session in a short term Wave 3 up. If the move down to 2.73 was just Wave A of Wave 2 then AVNR ended the session in Wave 2 down, but, it's probably Wave 3, because the Elliott Wave pattern from 3.03 down to 2.73 looks like an entire short term Wave 2 down. Since the moves are such large %s they're probably short term cycles, even though the timeframe is much shorter than it normally would be. AVNR's short term Wave 1 lasted about 3 hours versus the typical 2-3 days.
BQI failed to do a healthy Elliott Wave 12345 up down up down up upcycle, since Wave 4 took out Wave 2's cycle low at 3.00, with a cycle low so far at 2.98, see http://stockcharts.com/charts/gallery.html?bqi, therefore, I probably won't be trading BQI long for a while.
CALVF.OB is approaching a monthly cycle low/is in Wave C (might have bottomed today at 0.139), and, should bottom in the 10-14 cent range as discussed in recent weeks, see http://stockcharts.com/charts/gallery.html?calvf.
CEGE is approaching a monthly cycle low/is in Wave C (might have bottomed today at 3.86), see http://stockcharts.com/charts/gallery.html?cege.
DNDN's short term Wave 2 down appears to have bottomed at 5.55 late today versus a Wave 1 cycle high at 6.65 yesterday and a monthly cycle low at 4.95 on Friday, see http://stockcharts.com/charts/gallery.html?dndn.
LMC's short term Wave 2 down probably bottomed at 12.07 yesterday versus a monthly cycle low at 11.86 on 5-1, see http://finance.yahoo.com/q/ta?s=lmc&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. I might buy some after it breaks it's Wave 2 downtrend line (see Wave 2 declining peaks at http://stockcharts.com/charts/gallery.html?lmc). Also, waiting for reliable lead indicator NEM to establish an intermediate term cycle low probably makes sense, since LMC is a mining stock.
TMY's Cyclical Bear Market since May 2006 might have bottomed with a bullish double bottom cycle low at 2.03 yesterday and today, see http://stockcharts.com/charts/gallery.html?tmy. Volume was a strong 1.583 million shares, and, picked up dramatically as TMY bottomed near session's end, which is a bullish sign. I Watch has been bullish the past month, see http://iwp.thomsonfn.com/tfspro/iwatch/cgi-bin/iw_ticker?t=TMY&range=30&mgp=0&i=3&hdate=&x=9&y=11.
Two rockets in Wave C of monthly downcycles that might bottom this week are PUDC.OB (http://finance.yahoo.com/q/ta?s=pudc.ob&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==) and GNLM.OB (http://finance.yahoo.com/q/ta?s=gnlm.ob&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==).
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, 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/ .
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
1:28 PM
