Probably More Severe Weakness Is In Store Tomorrow For HUI/NEM/XAU/SPX/WMT
WMT is in the process of correcting (it's in a short term Wave 4 downcycle) it's recent huge short term Wave 3 spike move (http://stockcharts.com/charts/gallery.html?wmt), and, is in the process of trying to fill it's downside gap at 49.47 created at Monday's open, see 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==.
Assuming 49.47 gets filled then the next downside gap to watch for WMT is 47.60 created at 5-31's open. A short term Wave 5 upcycle probably lies ahead for WMT, and, should begin after 49.47 and possibly also 47.60 get filled. Obviously, there's a good chance that 47.60 gets filled in this very bearish market before WMT enters a short term Wave 5 upcycle.
So, more potentially severe weakness is probably in store for HUI/NEM/XAU/SPX/WMT tomorrow and possibly for a few sessions after that. The WMT Lead Indicator was a modestly bearish -0.19% versus the S & P 500 today/on 6-7, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC. The NEM Lead Indicator was a modestly bullish +0.46% versus the XAU today/on 6-7.
Now I'll explain why I didn't buy DNDN today. It filled it's downside gap early today at 8.20 as expected (see http://finance.yahoo.com/q/ta?s=dndn&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==), but, after plunging early on to 8.07 it briefly spiked dramatically to 8.68, which was a very bearish huge spike after which severe weakness usually (and did today) occurs, which made me cautious.
Then, when it bounced after the session cycle low at 8.05 later on I was waiting for DNDN to clearly break out of it's very short term downtrending channel, which didn't happen today. It'll probably happen tomorrow, then I'll look to buy a Wave 2 type significant pullback. DNDN has a huge bullish breakaway gap at 6.74 from 5-31. DNDN hit a short term Wave 4 cycle low at 7.55 on Monday and hit a monthly cycle low at 4.95, see http://stockcharts.com/charts/gallery.html?dndn.
AVNR has a bullish breakaway gap at 3.22 from 5-31 (http://finance.yahoo.com/q/ta?s=avnr&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==), and, put in a monthly cycle low at 3.26 on Monday, see http://stockcharts.com/charts/gallery.html?avnr. One has to consider the possibility that AVNR is actually doing Wave B up of a monthly downcycle, but, given the bullish breakaway gap and the fact that AVNR is acting well, it probably did an unusual two day but -18.50% (fell from 4.00 to 3.26) monthly Elliott Wave ABC down up down downcycle. It doesn't look like a monthly downcycle on the daily chart, which is unusual.
Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles." "Gaps action" is very important.
Waiting for a buy signal (strong Wave 1 type move) and buying a pullback (Wave 2 type move) is probably the best entry point strategy. DNDN's large inverse spike that occurred at 7.55 early on Monday was a sign that DNDN's short term Wave 4 had probably bottomed at 7.55, see http://finance.yahoo.com/q/ta?s=DNDN&t=1d&l=on&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==.
A stock I might buy tomorrow is QTWW, which entered Wave 5 of a big short term Wave 3 yesterday, see http://stockcharts.com/charts/gallery.html?qtww, and, has a big bullish breakaway gap at 1.46 from 5-31 (monthly cycle low at 1.17).
Another I might buy tomorrow is ACAD (a new rocket), which made a huge bullish breakaway gap yesterday from 12.43, and, is in a short term Wave 2 downcycle after putting in a monthly cycle low at 12.20 on Tuesday, see http://stockcharts.com/charts/gallery.html?acad.
MDII is in the process of putting in an intermediate term cycle low (is in Wave C of Wave C), see http://stockcharts.com/charts/gallery.html?mdii. One should wait for a short term Wave 1 upcycle, then buy during a short term Wave 2 down or early in a short term Wave 3 upcycle, if you're looking to buy.
AGEN entered a short term Wave 5 on Friday 5-25 after putting in a cycle low at 2.65 (monthly cycle low at 2.25), see http://stockcharts.com/charts/gallery.html?agen. AGEN broke out of it's short term Wave 5 triangle and is doing well, it's in Wave 4 down of the short term Wave 5.
CEGE is in a short term Wave 4, see http://stockcharts.com/charts/gallery.html?cege. A monthly cycle low occurred at 3.79.
FCEL put in a short term Wave 4 cycle low at 6.65 on Wednesday 5-30, versus a Wave 3 cycle high at 7.25 and monthly cycle low at 6.30, see http://stockcharts.com/charts/gallery.html?fcel. Wave 5 obviously appears to have peaked. FCEL has a bearish dark candle today, indicating that it closed below the open.
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
Assuming 49.47 gets filled then the next downside gap to watch for WMT is 47.60 created at 5-31's open. A short term Wave 5 upcycle probably lies ahead for WMT, and, should begin after 49.47 and possibly also 47.60 get filled. Obviously, there's a good chance that 47.60 gets filled in this very bearish market before WMT enters a short term Wave 5 upcycle.
So, more potentially severe weakness is probably in store for HUI/NEM/XAU/SPX/WMT tomorrow and possibly for a few sessions after that. The WMT Lead Indicator was a modestly bearish -0.19% versus the S & P 500 today/on 6-7, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC. The NEM Lead Indicator was a modestly bullish +0.46% versus the XAU today/on 6-7.
Now I'll explain why I didn't buy DNDN today. It filled it's downside gap early today at 8.20 as expected (see http://finance.yahoo.com/q/ta?s=dndn&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==), but, after plunging early on to 8.07 it briefly spiked dramatically to 8.68, which was a very bearish huge spike after which severe weakness usually (and did today) occurs, which made me cautious.
Then, when it bounced after the session cycle low at 8.05 later on I was waiting for DNDN to clearly break out of it's very short term downtrending channel, which didn't happen today. It'll probably happen tomorrow, then I'll look to buy a Wave 2 type significant pullback. DNDN has a huge bullish breakaway gap at 6.74 from 5-31. DNDN hit a short term Wave 4 cycle low at 7.55 on Monday and hit a monthly cycle low at 4.95, see http://stockcharts.com/charts/gallery.html?dndn.
AVNR has a bullish breakaway gap at 3.22 from 5-31 (http://finance.yahoo.com/q/ta?s=avnr&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==), and, put in a monthly cycle low at 3.26 on Monday, see http://stockcharts.com/charts/gallery.html?avnr. One has to consider the possibility that AVNR is actually doing Wave B up of a monthly downcycle, but, given the bullish breakaway gap and the fact that AVNR is acting well, it probably did an unusual two day but -18.50% (fell from 4.00 to 3.26) monthly Elliott Wave ABC down up down downcycle. It doesn't look like a monthly downcycle on the daily chart, which is unusual.
Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles." "Gaps action" is very important.
Waiting for a buy signal (strong Wave 1 type move) and buying a pullback (Wave 2 type move) is probably the best entry point strategy. DNDN's large inverse spike that occurred at 7.55 early on Monday was a sign that DNDN's short term Wave 4 had probably bottomed at 7.55, see http://finance.yahoo.com/q/ta?s=DNDN&t=1d&l=on&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c==.
A stock I might buy tomorrow is QTWW, which entered Wave 5 of a big short term Wave 3 yesterday, see http://stockcharts.com/charts/gallery.html?qtww, and, has a big bullish breakaway gap at 1.46 from 5-31 (monthly cycle low at 1.17).
Another I might buy tomorrow is ACAD (a new rocket), which made a huge bullish breakaway gap yesterday from 12.43, and, is in a short term Wave 2 downcycle after putting in a monthly cycle low at 12.20 on Tuesday, see http://stockcharts.com/charts/gallery.html?acad.
MDII is in the process of putting in an intermediate term cycle low (is in Wave C of Wave C), see http://stockcharts.com/charts/gallery.html?mdii. One should wait for a short term Wave 1 upcycle, then buy during a short term Wave 2 down or early in a short term Wave 3 upcycle, if you're looking to buy.
AGEN entered a short term Wave 5 on Friday 5-25 after putting in a cycle low at 2.65 (monthly cycle low at 2.25), see http://stockcharts.com/charts/gallery.html?agen. AGEN broke out of it's short term Wave 5 triangle and is doing well, it's in Wave 4 down of the short term Wave 5.
CEGE is in a short term Wave 4, see http://stockcharts.com/charts/gallery.html?cege. A monthly cycle low occurred at 3.79.
FCEL put in a short term Wave 4 cycle low at 6.65 on Wednesday 5-30, versus a Wave 3 cycle high at 7.25 and monthly cycle low at 6.30, see http://stockcharts.com/charts/gallery.html?fcel. Wave 5 obviously appears to have peaked. FCEL has a bearish dark candle today, indicating that it closed below the open.
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
1:33 PM
