SPX Is In Wave C Of An Intermediate Term Downcycle
SPX is in Wave C of an intermediate term downcycle. Thanks to a disappointing earnings outlook from reliable SPX/market lead indicator WMT yesterday SPX is now confirmed to be in Wave C of an intermediate term downcycle (http://stockcharts.com/charts/gallery.html?%24spx), since it took out the Wave A cycle low (occurred on Monday 8-6) yesterday (chart 1 at http://www.joefrocks.com/GoldStockCharts.html shows the recent intermediate term cycle high at 1555.90), see http://stockcharts.com/charts/gallery.html?%24spx and 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 reliable WMT Lead Indicator was very bearish during much of today's session, it was greater than -1.00% versus SPX at times, which correctly portended severe late session weakness, but, it turned very bullish late in the session, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=,p12,fs,w14&c=wmt,%5EGSPC, and, closed at a very bullish +0.66% versus SPX (S & P 500) today, so, SPX may have bottomed late today or may do so early tomorrow.
SPX's technical indicators like RSI, stochastics, and Williams %R are in or near oversold territory, and, Williams %R closed at an extremely oversold -97.875, with -100 being the maximum oversold extreme, which reliably portends a significant bounce in SPX very soon.
The Fed added $7 Billion in credit today after adding a very modest $2 Billion on Monday, a massive $24 Billion into the system last Thursday, and, a humongous $38 Billion into the system last Friday, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, to ward off a market crash and to provide confidence that one wouldn't occur.
Reliable SPX/market lead indicator WMT surprised to the downside yesterday thanks to a disappointing earnings outlook, and, took out 8-1's cycle low that was a likely monthly cycle low, see http://stockcharts.com/charts/gallery.html?wmt, but, is following a big picture Elliott Wave 12345 up down up down up pattern since putting in a Cyclical Bear Market cycle low at 41.18 in September 2005 (entered a Cyclical Bull Market), with this upcoming cycle low (might have occurred today) being a Wave 4 intermediate term cycle low.
Keep in mind that StockCharts data tends to be significantly different than the raw data used by most charting sites, but, no matter what site you use, you'll see that WMT is following an Elliott Wave 12345 up down up down up pattern since putting in a Cyclical Bear Market cycle low in September 2005.
After reliable SPX/market lead indicator WMT hits an intermediate term cycle low (possibly today, probably this week, http://stockcharts.com/charts/gallery.html?wmt) it needs to do a strong short term Wave 1 upcycle in order to hit an intermediate term cycle buy signal.
The good news is that there's a good chance that SPX/WMT will hit an important intermediate term cycle low this week, so, the trading environment should soon improve. Reliable SPX/market lead indicator WMT's enormous volume of 63.15 million shares yesterday is a sign that WMT is probably in the process of putting in an important cycle low, and, may have done so early today.
In this treacherous market day trading a modest position or sitting on the sidelines makes a lot of sense, so, I won't be discussing trading stocks today.
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/volatile stocks 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 reliable WMT Lead Indicator was very bearish during much of today's session, it was greater than -1.00% versus SPX at times, which correctly portended severe late session weakness, but, it turned very bullish late in the session, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=,p12,fs,w14&c=wmt,%5EGSPC, and, closed at a very bullish +0.66% versus SPX (S & P 500) today, so, SPX may have bottomed late today or may do so early tomorrow.
SPX's technical indicators like RSI, stochastics, and Williams %R are in or near oversold territory, and, Williams %R closed at an extremely oversold -97.875, with -100 being the maximum oversold extreme, which reliably portends a significant bounce in SPX very soon.
The Fed added $7 Billion in credit today after adding a very modest $2 Billion on Monday, a massive $24 Billion into the system last Thursday, and, a humongous $38 Billion into the system last Friday, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, to ward off a market crash and to provide confidence that one wouldn't occur.
Reliable SPX/market lead indicator WMT surprised to the downside yesterday thanks to a disappointing earnings outlook, and, took out 8-1's cycle low that was a likely monthly cycle low, see http://stockcharts.com/charts/gallery.html?wmt, but, is following a big picture Elliott Wave 12345 up down up down up pattern since putting in a Cyclical Bear Market cycle low at 41.18 in September 2005 (entered a Cyclical Bull Market), with this upcoming cycle low (might have occurred today) being a Wave 4 intermediate term cycle low.
Keep in mind that StockCharts data tends to be significantly different than the raw data used by most charting sites, but, no matter what site you use, you'll see that WMT is following an Elliott Wave 12345 up down up down up pattern since putting in a Cyclical Bear Market cycle low in September 2005.
After reliable SPX/market lead indicator WMT hits an intermediate term cycle low (possibly today, probably this week, http://stockcharts.com/charts/gallery.html?wmt) it needs to do a strong short term Wave 1 upcycle in order to hit an intermediate term cycle buy signal.
The good news is that there's a good chance that SPX/WMT will hit an important intermediate term cycle low this week, so, the trading environment should soon improve. Reliable SPX/market lead indicator WMT's enormous volume of 63.15 million shares yesterday is a sign that WMT is probably in the process of putting in an important cycle low, and, may have done so early today.
In this treacherous market day trading a modest position or sitting on the sidelines makes a lot of sense, so, I won't be discussing trading stocks today.
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/volatile stocks 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
1:13 PM
