SPX And Reliable SPX/Market Lead Indicator WMT's Elliott Wave Count
SPX (S & P 500) entered a countertrend Wave B upcycle at 1370.60 on Thursday 8-16 (http://stockcharts.com/charts/gallery.html?%24spx). The fact that this upcycle since 8-16 has been very parabolic/sharply rising, without the usual obvious zigzagging on the daily chart, is probably a sign that it's a countertrend Wave B upcycle/reflex rally, following the dramatic Wave A downcycle from the July cycle high at 1555.90 to 8-16's cycle low at 1370.60, that triggered a major 5% follow through sell signal, which indicates that an SPX (S & P 500) Cyclical Bear Market probably began in July after peaking at 1555.90, to see the major sell signal see chart 1 at http://www.joefrocks.com/GoldStockCharts.html.
The fact that this SPX (S & P 500) upcycle since 8-16 has been very parabolic/sharply rising makes the Elliott Wave count more difficult, but, it appears that SPX is in a big Wave 3 upcycle now, see http://stockcharts.com/charts/gallery.html?%24spx.
Yesterday I said that reliable SPX/market lead indicator WMT put in a Wave 4 cycle low at 43.03, but, since WMT hasn't exceeded it's Wave 1 cycle high at 44.70 that occurred on 8-17 (http://stockcharts.com/charts/gallery.html?wmt), yesterday's cycle low at 43.03 wasn't a Wave 4 cycle low, which means that WMT is still in Wave 3, and, that SPX's countertrend Wave B upcycle since 8-16 probably still has legs. It should peak below July's cycle high at 1555.90. Today's cycle high was 1479.40 and the close was 1479.37.
The fact that the WMT Lead Indicator is very bearish since SPX bottomed at 1370.60 mid session on 8-16 jives with SPX being in a countertrend Wave B upcycle (+0.17% today/on 8-24, -1.22% versus SPX yesterday/on 8-23, at -1.06% on 8-22, at +0.14% on 8-21, at +0.26% on 8-20, at -2.48% on 8-17, at +0.18% on 8-16).
Reliable SPX/market lead indicator WMT put in a bullish slightly higher Wave 2 double bottom cycle low at 42.96 on Monday 8-20 versus at 42.92 early on Thursday 8-16, which is a short term positive for the market, see http://stockcharts.com/charts/gallery.html?wmt.
I'll be looking to day trade the Ultra Long SPX ETF SSO or some other ETF/stock early on Monday.
Note that in the downcycle from the July cycle high at 1555.90 to Thursday 8-16's cycle low (http://stockcharts.com/charts/gallery.html?%5Espx) that the Wave B up of that downcycle lasted a grand total of only TWO DAYS, which is a clear indication that the downcycle from the July cycle high at 1555.90 to Thursday 8-16's cycle low is probably only a Wave A downcycle.
After that vicious Wave C downcycle bottoms, following the current Wave B, THEN a respectable lengthy multi month intermediate term upcycle should occur for SPX.
The NEM Lead Indicator has been very bearish recently, at -0.81% versus the XAU today/on 8-24, at +0.57% versus the XAU on 8-23, at -2.57% versus the XAU on 8-22, at +0.45% versus the XAU on 8-21, at -2.04% versus the XAU on 8-20, and, at -1.82% on Friday 8-17.
I'm probably going to trade only index and sector ETFs for a few months, so, I'm not going to be discussing individual stocks, unless I trade a basket of stocks in a given sector, like I used to do in the previous Wave 1 HUI/XAU Cyclical Bull Market that ended on 5-11-06.
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 or intermediate term 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 volatile stocks/ETFs 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 $475ish right now, so, gold would be a great buy in the $475-500 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
The fact that this SPX (S & P 500) upcycle since 8-16 has been very parabolic/sharply rising makes the Elliott Wave count more difficult, but, it appears that SPX is in a big Wave 3 upcycle now, see http://stockcharts.com/charts/gallery.html?%24spx.
Yesterday I said that reliable SPX/market lead indicator WMT put in a Wave 4 cycle low at 43.03, but, since WMT hasn't exceeded it's Wave 1 cycle high at 44.70 that occurred on 8-17 (http://stockcharts.com/charts/gallery.html?wmt), yesterday's cycle low at 43.03 wasn't a Wave 4 cycle low, which means that WMT is still in Wave 3, and, that SPX's countertrend Wave B upcycle since 8-16 probably still has legs. It should peak below July's cycle high at 1555.90. Today's cycle high was 1479.40 and the close was 1479.37.
The fact that the WMT Lead Indicator is very bearish since SPX bottomed at 1370.60 mid session on 8-16 jives with SPX being in a countertrend Wave B upcycle (+0.17% today/on 8-24, -1.22% versus SPX yesterday/on 8-23, at -1.06% on 8-22, at +0.14% on 8-21, at +0.26% on 8-20, at -2.48% on 8-17, at +0.18% on 8-16).
Reliable SPX/market lead indicator WMT put in a bullish slightly higher Wave 2 double bottom cycle low at 42.96 on Monday 8-20 versus at 42.92 early on Thursday 8-16, which is a short term positive for the market, see http://stockcharts.com/charts/gallery.html?wmt.
I'll be looking to day trade the Ultra Long SPX ETF SSO or some other ETF/stock early on Monday.
Note that in the downcycle from the July cycle high at 1555.90 to Thursday 8-16's cycle low (http://stockcharts.com/charts/gallery.html?%5Espx) that the Wave B up of that downcycle lasted a grand total of only TWO DAYS, which is a clear indication that the downcycle from the July cycle high at 1555.90 to Thursday 8-16's cycle low is probably only a Wave A downcycle.
After that vicious Wave C downcycle bottoms, following the current Wave B, THEN a respectable lengthy multi month intermediate term upcycle should occur for SPX.
The NEM Lead Indicator has been very bearish recently, at -0.81% versus the XAU today/on 8-24, at +0.57% versus the XAU on 8-23, at -2.57% versus the XAU on 8-22, at +0.45% versus the XAU on 8-21, at -2.04% versus the XAU on 8-20, and, at -1.82% on Friday 8-17.
I'm probably going to trade only index and sector ETFs for a few months, so, I'm not going to be discussing individual stocks, unless I trade a basket of stocks in a given sector, like I used to do in the previous Wave 1 HUI/XAU Cyclical Bull Market that ended on 5-11-06.
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 or intermediate term 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 volatile stocks/ETFs 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 $475ish right now, so, gold would be a great buy in the $475-500 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
1:41 PM
