Fed Punch Spiking Continues And Reliable HUI/XAU Lead Indicator NEM Fell Out Of Bed
The Fed continues to desperately spike the punch, injecting a massive $15.25 Billion into the system today (http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE), an average day is about $5 Billion, to try to make their rate cut appear to be a success. It isn't. They don't control economic cycles. They REACT to them.
Despite the Fed's massive punch spiking recently ($29 Billion last Thursday, $15.25 Billion today) the S & P 500 (SPX) only managed to rally 3-4 hours after the Fed rate cut and has trended down since early last Wednesday 9-19 (http://stockcharts.com/charts/gallery.html?%24spx), when a likely countertrend Wave B cycle high occurred for the cycle from 8-16 to 9-19.
The S & P 500 (SPX) probably/very likely entered a Cyclical Bear Market in July 2007, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, which shows the major 5% follow through sell signal that occurred after SPX's primary trendline broke down.
Reliable HUI/XAU lead indicator NEM literally fell out of bed early today, falling from a session cycle high at 48.25 to a cycle low so far at 45.36, a huge decline of -5.99% that occurred in only about an hour's time, see http://finance.yahoo.com/q/ta?s=nem&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=.
Do yourself a big favor and ween yourself off the nitwit gold writers (on the free web sites) that are always bullish. Most are just clueless and some have a bullish agenda because of their newsletter or company. I'm not sure how looking stupid promotes a newsletter or company, but, those guys/girls aren't smart enough to know how bad they look.
XAU Implied Volatility indicated that severe XAU weakness was likely today, because, it fell sharply to 37.935 yesterday/9-25 from 38.700 on 9-24, despite the XAU falling -1.58% yesterday, which was a very sharp (3-6%) rise in complacency that pointed to likely severe weakness today. Normally a significant XAU decline leads to a rise in fear, thus a rise in XAU Implied Volatility.
It's likely that Friday 9-21's early cycle highs at 402.27 for HUI (see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui to see double top at 401.69 on 5-11-06/402.27 on 9-21-07) and at 173.17 for the XAU (versus 171.71 on 5-11-06) are countertrend Wave B bearish double top cycle highs for the Wave 2 Cyclical Bear Market since 5-11-06. The huge spike move from 8-16-07 until 9-21-07 is typical of what happens near very important cycle highs.
See yesterday's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html for an important precious metals sector update.
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
Despite the Fed's massive punch spiking recently ($29 Billion last Thursday, $15.25 Billion today) the S & P 500 (SPX) only managed to rally 3-4 hours after the Fed rate cut and has trended down since early last Wednesday 9-19 (http://stockcharts.com/charts/gallery.html?%24spx), when a likely countertrend Wave B cycle high occurred for the cycle from 8-16 to 9-19.
The S & P 500 (SPX) probably/very likely entered a Cyclical Bear Market in July 2007, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, which shows the major 5% follow through sell signal that occurred after SPX's primary trendline broke down.
Reliable HUI/XAU lead indicator NEM literally fell out of bed early today, falling from a session cycle high at 48.25 to a cycle low so far at 45.36, a huge decline of -5.99% that occurred in only about an hour's time, see http://finance.yahoo.com/q/ta?s=nem&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=.
Do yourself a big favor and ween yourself off the nitwit gold writers (on the free web sites) that are always bullish. Most are just clueless and some have a bullish agenda because of their newsletter or company. I'm not sure how looking stupid promotes a newsletter or company, but, those guys/girls aren't smart enough to know how bad they look.
XAU Implied Volatility indicated that severe XAU weakness was likely today, because, it fell sharply to 37.935 yesterday/9-25 from 38.700 on 9-24, despite the XAU falling -1.58% yesterday, which was a very sharp (3-6%) rise in complacency that pointed to likely severe weakness today. Normally a significant XAU decline leads to a rise in fear, thus a rise in XAU Implied Volatility.
It's likely that Friday 9-21's early cycle highs at 402.27 for HUI (see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui to see double top at 401.69 on 5-11-06/402.27 on 9-21-07) and at 173.17 for the XAU (versus 171.71 on 5-11-06) are countertrend Wave B bearish double top cycle highs for the Wave 2 Cyclical Bear Market since 5-11-06. The huge spike move from 8-16-07 until 9-21-07 is typical of what happens near very important cycle highs.
See yesterday's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html for an important precious metals sector update.
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
7:16 AM
