Reliable SPX/Market Lead Indicator WMT Should Be Bottoming, BUT, SPX Is In A Short Term Wave A Downcycle
A Wave 5 monthly upcycle of reliable SPX/market lead indicator WMT's Wave 5 intermediate term upcycle since December 2006 may have began today at 45.73, and, should take out the Wave 3 intermediate term cycle high that occurred at 51.47 in October 2006 in the near future, see http://stockcharts.com/charts/gallery.html?wmt.
Toward session's end WMT was testing the session cycle low at 45.73, 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==. The bearish WMT Lead Indicator today, at -0.28% versus SPX, suggests that WMT and SPX may make lower cycle lows on Monday.
The current substantial decline is probably just a short term Wave A down of the intermediate term downcycle for SPX (read on and see annotated chart 1 at http://www.joefrocks.com/GoldStockCharts.html), so, this is a very precarious market now. Once SPX's short term Wave A bottoms, possibly on Monday, it should do a short term countertrend Wave B upcycle for a week or two, then another substantial decline should occur corresponding to Wave C of SPX's intermediate term downcycle, in which it will bottom.
Once SPX's short term countertrend Wave B peaks in a week or two one should seriously consider exiting long positions and possibly trade short to catch the short term Wave C downcycle. The Elliott Wave count will be highly useful in timing Wave B (should do 12345 up down up down up pattern), and, a bearish large spike is likely to occur when Wave B peaks.
See annotated chart 1 at http://www.joefrocks.com/GoldStockCharts.html for the S & P 500's (SPX) Elliott Wave count. A intermediate term cycle high occurred at 1555.90 nine sessions ago, for the intermediate term upcycle that began in March (see chart 1 at the link above). The current substantial decline is probably just Wave A down of the intermediate term downcycle (see chart 1 at the link above).
Note the Elliott Wave ABC down up down pattern in the previous intermediate term downcycle (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) and in Wave 4 down of the most recent intermediate term upcycle that recently peaked at 1555.90. I probably will do an SPX and WMT chart weekly or at least as required.
It's possible that the recent cycle high at 1555.90 is a very important Cyclical Bull Market cycle high for the Cyclical Bull Market that began in October 2002. If so then SPX's Cyclical Bull Market uptrendline will clearly break down and flash a major sell signal.
There isn't much point in discussing the trading stocks today, but, if you're a daredevil, three trading stocks that appear to have bottomed are FRPT (http://stockcharts.com/charts/gallery.html?frpt), JASO (http://stockcharts.com/charts/gallery.html?jaso), and JRCC (http://stockcharts.com/charts/gallery.html?jrcc).
In this market especially, even if you're a daredevil, it makes a lot of sense to wait for a strong short term Wave 1 upcycle to trigger a monthly cycle buy signal, then look to buy late in a short term Wave 2 downcycle or early in Wave 3 up. Using cycle trendlines also makes a lot of sense. Usually at least one important trendline (important short term at least) will be broken before one should look to buy.
Often a bullish large inverse spike will occur when a cycle low occurs, which is a sign to look to go long. Conversely, often a bearish large spike will occur when a cycle high occurs, which is a sign to look to exit a long position.
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.
If one decides to trade rockets obviously paper trade for a while or trade very modest positions at first.
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
Toward session's end WMT was testing the session cycle low at 45.73, 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==. The bearish WMT Lead Indicator today, at -0.28% versus SPX, suggests that WMT and SPX may make lower cycle lows on Monday.
The current substantial decline is probably just a short term Wave A down of the intermediate term downcycle for SPX (read on and see annotated chart 1 at http://www.joefrocks.com/GoldStockCharts.html), so, this is a very precarious market now. Once SPX's short term Wave A bottoms, possibly on Monday, it should do a short term countertrend Wave B upcycle for a week or two, then another substantial decline should occur corresponding to Wave C of SPX's intermediate term downcycle, in which it will bottom.
Once SPX's short term countertrend Wave B peaks in a week or two one should seriously consider exiting long positions and possibly trade short to catch the short term Wave C downcycle. The Elliott Wave count will be highly useful in timing Wave B (should do 12345 up down up down up pattern), and, a bearish large spike is likely to occur when Wave B peaks.
See annotated chart 1 at http://www.joefrocks.com/GoldStockCharts.html for the S & P 500's (SPX) Elliott Wave count. A intermediate term cycle high occurred at 1555.90 nine sessions ago, for the intermediate term upcycle that began in March (see chart 1 at the link above). The current substantial decline is probably just Wave A down of the intermediate term downcycle (see chart 1 at the link above).
Note the Elliott Wave ABC down up down pattern in the previous intermediate term downcycle (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) and in Wave 4 down of the most recent intermediate term upcycle that recently peaked at 1555.90. I probably will do an SPX and WMT chart weekly or at least as required.
It's possible that the recent cycle high at 1555.90 is a very important Cyclical Bull Market cycle high for the Cyclical Bull Market that began in October 2002. If so then SPX's Cyclical Bull Market uptrendline will clearly break down and flash a major sell signal.
There isn't much point in discussing the trading stocks today, but, if you're a daredevil, three trading stocks that appear to have bottomed are FRPT (http://stockcharts.com/charts/gallery.html?frpt), JASO (http://stockcharts.com/charts/gallery.html?jaso), and JRCC (http://stockcharts.com/charts/gallery.html?jrcc).
In this market especially, even if you're a daredevil, it makes a lot of sense to wait for a strong short term Wave 1 upcycle to trigger a monthly cycle buy signal, then look to buy late in a short term Wave 2 downcycle or early in Wave 3 up. Using cycle trendlines also makes a lot of sense. Usually at least one important trendline (important short term at least) will be broken before one should look to buy.
Often a bullish large inverse spike will occur when a cycle low occurs, which is a sign to look to go long. Conversely, often a bearish large spike will occur when a cycle high occurs, which is a sign to look to exit a long position.
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.
If one decides to trade rockets obviously paper trade for a while or trade very modest positions at first.
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
1:48 PM
