SPX Is In A Short Term Wave 1 Upcycle That's Rolling Over
SPX is in a short term Wave 1 upcycle of the countertrend Wave B upcycle that began last Thursday, 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=, and, is in Wave 5 of the short term Wave 1 upcycle. Since early last Friday, when SPX entered Wave 5 of the short term Wave 1, SPX's uptrend has been very flat, so, the short term Wave 1 is peaking in rollover mode.
Since last Thursday SPX did an up down up down and entered Wave 5 of the short term Wave 1 upcycle early on Friday, 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=. The short term Wave 1 upcycle is peaking in rollover mode, after the brief very sharp rally/spike move, that lasted about 3 hours, from mid session Thursday until shortly after Friday's open.
The short term Wave 1 upcycle will probably peak tomorrow, which jives with the very bearish WMT Lead Indicator at -2.48% versus SPX on Friday, at +0.26% yesterday, and at +0.14% today, 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.
As discussed in a previous post (http://tradethecycles.blogspot.com/2007/08/extremely-important-5-follow-through.html) SPX's upcycle that began last Thursday is probably/very likely to be a countertrend Wave B upcycle that will be similar to a monthly upcycle, because, an SPX Cyclical Bear Market probably began in July after peaking at 1555.90, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html.
Note that in the downcycle from the July cycle high at 1555.90 to Thursday'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'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.
Reliable SPX/market lead indicator WMT put in a bullish slightly higher double bottom cycle low at 42.96 yesterday versus at 42.92 early last Thursday, which is a short term positive for the market, see http://stockcharts.com/charts/gallery.html?wmt. Also, there's a bullish large inverse spike on yesterday's and today's candle.
The NEM Lead Indicator has been very bearish recently (two of the past three days), at +0.45% versus the XAU today, at -2.04% versus the XAU yesterday/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.
Tomorrow I may day trade SSO or UWM early on, then, if I'm convinced that SPX's short term Wave 1 upcycle has peaked, I'll look to effectively day trade short with SDS or TWM if there's enough time left in the session, and, I may hold a modest SDS or TWM position overnight.
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
Since last Thursday SPX did an up down up down and entered Wave 5 of the short term Wave 1 upcycle early on Friday, 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=. The short term Wave 1 upcycle is peaking in rollover mode, after the brief very sharp rally/spike move, that lasted about 3 hours, from mid session Thursday until shortly after Friday's open.
The short term Wave 1 upcycle will probably peak tomorrow, which jives with the very bearish WMT Lead Indicator at -2.48% versus SPX on Friday, at +0.26% yesterday, and at +0.14% today, 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.
As discussed in a previous post (http://tradethecycles.blogspot.com/2007/08/extremely-important-5-follow-through.html) SPX's upcycle that began last Thursday is probably/very likely to be a countertrend Wave B upcycle that will be similar to a monthly upcycle, because, an SPX Cyclical Bear Market probably began in July after peaking at 1555.90, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html.
Note that in the downcycle from the July cycle high at 1555.90 to Thursday'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'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.
Reliable SPX/market lead indicator WMT put in a bullish slightly higher double bottom cycle low at 42.96 yesterday versus at 42.92 early last Thursday, which is a short term positive for the market, see http://stockcharts.com/charts/gallery.html?wmt. Also, there's a bullish large inverse spike on yesterday's and today's candle.
The NEM Lead Indicator has been very bearish recently (two of the past three days), at +0.45% versus the XAU today, at -2.04% versus the XAU yesterday/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.
Tomorrow I may day trade SSO or UWM early on, then, if I'm convinced that SPX's short term Wave 1 upcycle has peaked, I'll look to effectively day trade short with SDS or TWM if there's enough time left in the session, and, I may hold a modest SDS or TWM position overnight.
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
1:31 PM
