SPX's Short Term Wave 4 Downcycle Went Parabolic As Expected
SPX's Short Term Wave 4 Downcycle went parabolic as expected today, and, may have bottomed at session's end, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==.
I came very close to shorting WMT and buying the "Ultra Short" SPX ETF SDS (has strong volume, you don't need a margin account to effectively short sell anymore, though I do of course have a margin account) early today, but, WMT's mid session strength kept me out, 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=. It would have ended up being a day trade.
Tomorrow I'll look to trade the "Ultra Long" SPX ETF SSO once the short term Wave 5 upcycle begins (probably will at the open). I'll wait for significant strength, an intraday Wave 1 type move, then look to buy an intraday Wave 2 type pullback.
SPX is/was probably in a short term Wave 4 down of the third/final Wave 5 upcycle of the intermediate term upcycle since mid March, see http://stockcharts.com/charts/gallery.html?%24spx.
The very bullish WMT Lead Indicator today (+0.91% versus SPX), see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, points to significant strength for SPX and most sectors tomorrow, due to program buying.
The NEM Lead Indicator was a slightly bearish -0.17% versus the XAU today, and, was a bearish -2.57% versus the XAU last week, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.
The rockets highlights are as follows:
GNBT's (price/volume action looks great) short term Wave 2 down downcycle probably bottomed at 1.65 today (http://stockcharts.com/charts/gallery.html?gnbt), see http://finance.yahoo.com/q/ta?s=gnbt&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. The rise to 1.77 on strong volume (short term buy signal), plus the large inverse spike on today's candle, are signs that Wave 2 bottomed at 1.65. I'll look to buy on weakness tomorrow.
GNBT's Wave 1 peaked Wednesday 6-13 at 2.14. GNBT entered a Cyclical Bull Market at 0.51 in March 2005. GNBT's a new biotech rocket with probably more than enough average volume to be reasonably liquid, that entered an important intermediate term and monthly upcycle at 1.26 on Monday 6-11, see http://finance.yahoo.com/q/ta?s=gnbt&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. GNBT's short term Wave 1 was up "big" on very strong volume, see http://stockcharts.com/charts/gallery.html?gnbt.
A new rocket whose price/volume action looks great is TMTA, see http://stockcharts.com/charts/gallery.html?tmta, which entered a monthly upcycle and probably a new Cyclical Bull Market at 0.28 in early June. TMTA is in Wave C of a short term Wave 4 down that may bottom tomorrow, see http://finance.yahoo.com/q/ta?s=tmta&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. I'll be looking to buy this tomorrow.
MDII completed a two month intermediate term Elliott Wave ABC down up down downcycle/correction recently, putting in a monthly and an intermediate term cycle low at 1.15, see http://stockcharts.com/charts/gallery.html?mdii. MDII had a huge spike move yesterday in a short term Wave 3 that peaked today at 1.73, and, made a large bullish breakaway gap at yesterday's open from 1.23.
HOKU is in Wave C of a monthly downcycle, see http://finance.yahoo.com/q/ta?s=hoku&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c= and http://stockcharts.com/charts/gallery.html?mdii. HOKU made a huge bullish breakaway gap from 4.60 recently.
Monday EPCT hit a Wave 2 short term cycle low at 2.26, which means that the downside gap at 2.18 that occurred at Friday's open is a bullish breakaway gap. EPCT broke it's Wave 2 short term downtrend with a vengeance and hit a short term buy signal yesterday, see http://finance.yahoo.com/q/ta?s=epct&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==.
On a daily chart yesterday's move looked like a Wave B type move, but, EPCT appears to have done a complete Elliott Wave short term Wave 2 downcycle that bottomed at 2.26 on Monday, based on the Elliott Wave count. Early last Friday there was a down up down Wave A followed by a Wave B up and a down up down Wave C that bottomed at 2.26 on Monday. Also, the large inverse spike that occurred Monday (http://stockcharts.com/charts/gallery.html?epct), plus the fact that the downside gap at 2.18 is a breakaway gap, are bullish signs. EPCT rose like a rocket yesterday and has had a sharp pullback, so, I'm looking to buy.
CVTX's continued to go nuts on very strong volume yesterday, see http://stockcharts.com/charts/gallery.html?cvtx. What probably happened is that CVTX was actually in the final very parabolic Wave 5 upcycle (a brief "monthly" upcycle) of the intermediate term upcycle that began at 6.43 in late March. The monthly upcycle since hitting 9.75 in early June was probably important topping action. Therefore, I probably won't be buying a very short term pullback, but, will look for a multi week Elliott wave ABC down up down correction/downcycle.
As discussed before QTWW's short term Wave 5 ran away from me, see http://stockcharts.com/charts/gallery.html?tmta, so, I'll look to buy after a one to two week Elliott Wave ABC down up down correction/downcycle. QTWW filled it's downside gap at 1.46 on Tuesday 6-12 (monthly cycle low at 1.17), see http://stockcharts.com/charts/gallery.html?qtww. QTWW's short term Wave 4 bottomed at 1.434 on Wednesday 6-13.
ACAD (http://stockcharts.com/charts/gallery.html?acad) filled it's downside gap at 13.96 created at Monday 6-11's open as expected last Wednesday 6-13, see http://finance.yahoo.com/q/ta?s=acad&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. I'll be looking to buy a pullback this week. ACAD's short term Wave 3 may have peaked today at 15.42 (monthly cycle low (made a huge bullish breakaway gap on Wednesday 6-6 from 12.43) at 12.20 on Tuesday 6-5).
RVNG.OB's short term Wave 4 probably bottomed at 1.10 last Wednesday, see http://stockcharts.com/charts/gallery.html?rvng. There's a bullish double bottom, with each cycle low having a large bullish inverse spike. There's a downside gap at 1.00 (bullish breakaway gap) that will probably get filled later on. RVNG may actually be in Wave B up of a monthly downcycle, the Elliott Wave count isn't clear right now, so, I'm holding off on this for now.
AVNR's monthly downcycle (since monthly cycle peaked at 4.00) probably hit a monthly cycle low at 3.04 on Thursday 6-14, see http://stockcharts.com/charts/gallery.html?avnr. AVNR rallied dramatically to a session cycle high at 3.35 on strong volume on Thursday 6-14, which was a monthly cycle buy signal.
DNDN needs to establish a short term Wave 4 cycle low before I look to go long, see http://stockcharts.com/charts/gallery.html?dndn. The downside gap at 6.74 created on 5-31 may get filled in Wave 4. The bearish huge decline after the giant Wave 3 spike move to 13.00 indicated that a long short term Wave 4 was a likely scenario. The strategy of waiting for strength (short term buy signal) then looking to buy a pullback has served me well and kept me out of DNDN in the long Wave 4.
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.
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
I came very close to shorting WMT and buying the "Ultra Short" SPX ETF SDS (has strong volume, you don't need a margin account to effectively short sell anymore, though I do of course have a margin account) early today, but, WMT's mid session strength kept me out, 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=. It would have ended up being a day trade.
Tomorrow I'll look to trade the "Ultra Long" SPX ETF SSO once the short term Wave 5 upcycle begins (probably will at the open). I'll wait for significant strength, an intraday Wave 1 type move, then look to buy an intraday Wave 2 type pullback.
SPX is/was probably in a short term Wave 4 down of the third/final Wave 5 upcycle of the intermediate term upcycle since mid March, see http://stockcharts.com/charts/gallery.html?%24spx.
The very bullish WMT Lead Indicator today (+0.91% versus SPX), see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, points to significant strength for SPX and most sectors tomorrow, due to program buying.
The NEM Lead Indicator was a slightly bearish -0.17% versus the XAU today, and, was a bearish -2.57% versus the XAU last week, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.
The rockets highlights are as follows:
GNBT's (price/volume action looks great) short term Wave 2 down downcycle probably bottomed at 1.65 today (http://stockcharts.com/charts/gallery.html?gnbt), see http://finance.yahoo.com/q/ta?s=gnbt&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. The rise to 1.77 on strong volume (short term buy signal), plus the large inverse spike on today's candle, are signs that Wave 2 bottomed at 1.65. I'll look to buy on weakness tomorrow.
GNBT's Wave 1 peaked Wednesday 6-13 at 2.14. GNBT entered a Cyclical Bull Market at 0.51 in March 2005. GNBT's a new biotech rocket with probably more than enough average volume to be reasonably liquid, that entered an important intermediate term and monthly upcycle at 1.26 on Monday 6-11, see http://finance.yahoo.com/q/ta?s=gnbt&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. GNBT's short term Wave 1 was up "big" on very strong volume, see http://stockcharts.com/charts/gallery.html?gnbt.
A new rocket whose price/volume action looks great is TMTA, see http://stockcharts.com/charts/gallery.html?tmta, which entered a monthly upcycle and probably a new Cyclical Bull Market at 0.28 in early June. TMTA is in Wave C of a short term Wave 4 down that may bottom tomorrow, see http://finance.yahoo.com/q/ta?s=tmta&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. I'll be looking to buy this tomorrow.
MDII completed a two month intermediate term Elliott Wave ABC down up down downcycle/correction recently, putting in a monthly and an intermediate term cycle low at 1.15, see http://stockcharts.com/charts/gallery.html?mdii. MDII had a huge spike move yesterday in a short term Wave 3 that peaked today at 1.73, and, made a large bullish breakaway gap at yesterday's open from 1.23.
HOKU is in Wave C of a monthly downcycle, see http://finance.yahoo.com/q/ta?s=hoku&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c= and http://stockcharts.com/charts/gallery.html?mdii. HOKU made a huge bullish breakaway gap from 4.60 recently.
Monday EPCT hit a Wave 2 short term cycle low at 2.26, which means that the downside gap at 2.18 that occurred at Friday's open is a bullish breakaway gap. EPCT broke it's Wave 2 short term downtrend with a vengeance and hit a short term buy signal yesterday, see http://finance.yahoo.com/q/ta?s=epct&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==.
On a daily chart yesterday's move looked like a Wave B type move, but, EPCT appears to have done a complete Elliott Wave short term Wave 2 downcycle that bottomed at 2.26 on Monday, based on the Elliott Wave count. Early last Friday there was a down up down Wave A followed by a Wave B up and a down up down Wave C that bottomed at 2.26 on Monday. Also, the large inverse spike that occurred Monday (http://stockcharts.com/charts/gallery.html?epct), plus the fact that the downside gap at 2.18 is a breakaway gap, are bullish signs. EPCT rose like a rocket yesterday and has had a sharp pullback, so, I'm looking to buy.
CVTX's continued to go nuts on very strong volume yesterday, see http://stockcharts.com/charts/gallery.html?cvtx. What probably happened is that CVTX was actually in the final very parabolic Wave 5 upcycle (a brief "monthly" upcycle) of the intermediate term upcycle that began at 6.43 in late March. The monthly upcycle since hitting 9.75 in early June was probably important topping action. Therefore, I probably won't be buying a very short term pullback, but, will look for a multi week Elliott wave ABC down up down correction/downcycle.
As discussed before QTWW's short term Wave 5 ran away from me, see http://stockcharts.com/charts/gallery.html?tmta, so, I'll look to buy after a one to two week Elliott Wave ABC down up down correction/downcycle. QTWW filled it's downside gap at 1.46 on Tuesday 6-12 (monthly cycle low at 1.17), see http://stockcharts.com/charts/gallery.html?qtww. QTWW's short term Wave 4 bottomed at 1.434 on Wednesday 6-13.
ACAD (http://stockcharts.com/charts/gallery.html?acad) filled it's downside gap at 13.96 created at Monday 6-11's open as expected last Wednesday 6-13, see http://finance.yahoo.com/q/ta?s=acad&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c==. I'll be looking to buy a pullback this week. ACAD's short term Wave 3 may have peaked today at 15.42 (monthly cycle low (made a huge bullish breakaway gap on Wednesday 6-6 from 12.43) at 12.20 on Tuesday 6-5).
RVNG.OB's short term Wave 4 probably bottomed at 1.10 last Wednesday, see http://stockcharts.com/charts/gallery.html?rvng. There's a bullish double bottom, with each cycle low having a large bullish inverse spike. There's a downside gap at 1.00 (bullish breakaway gap) that will probably get filled later on. RVNG may actually be in Wave B up of a monthly downcycle, the Elliott Wave count isn't clear right now, so, I'm holding off on this for now.
AVNR's monthly downcycle (since monthly cycle peaked at 4.00) probably hit a monthly cycle low at 3.04 on Thursday 6-14, see http://stockcharts.com/charts/gallery.html?avnr. AVNR rallied dramatically to a session cycle high at 3.35 on strong volume on Thursday 6-14, which was a monthly cycle buy signal.
DNDN needs to establish a short term Wave 4 cycle low before I look to go long, see http://stockcharts.com/charts/gallery.html?dndn. The downside gap at 6.74 created on 5-31 may get filled in Wave 4. The bearish huge decline after the giant Wave 3 spike move to 13.00 indicated that a long short term Wave 4 was a likely scenario. The strategy of waiting for strength (short term buy signal) then looking to buy a pullback has served me well and kept me out of DNDN in the long Wave 4.
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.
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
1:36 PM
