HUI's Elliott Wave Count Confirms A Likely Countertrend Wave B Cycle High
HUI's Elliott Wave count confirms that a likely countertrend Wave B bearish double top cycle high occurred at 402.27 on 9-21-07 versus the Wave 1 Cyclical Bull Market cycle high at 401.69 on 5-11-06. The second StockCharts HUI gallery chart labels all important cycle highs/lows, see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui.
HUI's Wave 1 Cyclical Bull Market cycle high occurred at 401.69 on 5-11-06. HUI's Wave A cycle low (of the Wave 2 Cyclical Bear Market) occurred at 270.54 in June 2006, the Wave 1 cycle high of the countertrend Wave B occurred at 369.38 in September 2006, the Wave 2 cycle low of Wave B occurred at 274.72 in October 2006, the Wave 3 cycle high of Wave B occurred at 372.20 in July 2007, the Wave 4 cycle low of Wave B occurred at 284.85 in August 2007, the third/probably final Wave 5 cycle high of Wave B occurred at 402.27 on September 21, 2007.
So, HUI (and the XAU of course) probably entered the final Wave C downcycle (of it's Wave 2 Cyclical Bear Market since 5-11-06) on 9-21-07, and, should decline to it's Secular Bull Market (since October 2000) uptrend line at 220ish (maybe a bit lower) in the next 6-12+ months, see chart 9 at http://www.joefrocks.com/GoldStockCharts.html to see HUI's primary Secular Bull Market uptrend line.
Primary trendlines are basic technical analysis, yet, one would be very hard pressed to find a single gold writer on the freely available sites who TRULY uses them (uses them effectively and discusses them with price targets). The only time that a sector, index, stock, etc. is timely from an investor's long term point of view is near it's primary trendline. Basic stuff.
HUI and the XAU probably put in bearish countertrend Wave B double top cycle highs on 9-21-07 at 402.27/173.17 (of the Wave 2 Cyclical Bear Market since 5-11-06, see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui) versus Wave 1 Cyclical Bull Market cycle highs on 5-11-06 at 401.69/171.71. This jives with the extremely bearish NEM Lead Indicator and the extremely bearish COT (Commitments Of Traders) data (see next two paragraphs). A major gold massacre is probably brewing.
The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = -0.41% versus the XAU on 9-28, -2.21% on 9-27, -4.13% on 9-26, +0.40% on 9-25, +2.03% on 9-24, +0.07% versus the XAU on 9-21, -1.46% on 9-20, +0.69% on 9-19, -2.33% on 9-18, -0.53% on 9-17, +0.12% on 9-14, -1.34% on 9-13,+0.02% on 9-12, +0.25% on 9-11, -0.69% on 9-10, +0.42% on 9-7, -1.39% on 9-6, +0.06% on 9-5, -1.81% on 9-4, -0.98% on 8-31, -0.03% on 8-30, -1.86% on 8-29 = an extremely bearish -15.11% versus the XAU the past 22 sessions, see six month NEM Lead Indicator at http://finance.yahoo.com/q/ta?s=%5EXAU&t=6m&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem.
The latest gold COT (Commitments Of Traders) Data (5 day period ending 9-25) is very bearish, see the last/third data at http://www.cftc.gov/dea/options/deacmxsof.htm. The savvy non contrarian gold Commercial Traders continue to go massively short, adding a large 27,946 short gold futures and options contracts (over 17,000 the prior week and a massive 53,207 the week before that), while liquidating 2977 long gold futures and options contracts.
See Tuesday 9-25's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html for additional important precious metals sector analysis.
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
HUI's Wave 1 Cyclical Bull Market cycle high occurred at 401.69 on 5-11-06. HUI's Wave A cycle low (of the Wave 2 Cyclical Bear Market) occurred at 270.54 in June 2006, the Wave 1 cycle high of the countertrend Wave B occurred at 369.38 in September 2006, the Wave 2 cycle low of Wave B occurred at 274.72 in October 2006, the Wave 3 cycle high of Wave B occurred at 372.20 in July 2007, the Wave 4 cycle low of Wave B occurred at 284.85 in August 2007, the third/probably final Wave 5 cycle high of Wave B occurred at 402.27 on September 21, 2007.
So, HUI (and the XAU of course) probably entered the final Wave C downcycle (of it's Wave 2 Cyclical Bear Market since 5-11-06) on 9-21-07, and, should decline to it's Secular Bull Market (since October 2000) uptrend line at 220ish (maybe a bit lower) in the next 6-12+ months, see chart 9 at http://www.joefrocks.com/GoldStockCharts.html to see HUI's primary Secular Bull Market uptrend line.
Primary trendlines are basic technical analysis, yet, one would be very hard pressed to find a single gold writer on the freely available sites who TRULY uses them (uses them effectively and discusses them with price targets). The only time that a sector, index, stock, etc. is timely from an investor's long term point of view is near it's primary trendline. Basic stuff.
HUI and the XAU probably put in bearish countertrend Wave B double top cycle highs on 9-21-07 at 402.27/173.17 (of the Wave 2 Cyclical Bear Market since 5-11-06, see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui) versus Wave 1 Cyclical Bull Market cycle highs on 5-11-06 at 401.69/171.71. This jives with the extremely bearish NEM Lead Indicator and the extremely bearish COT (Commitments Of Traders) data (see next two paragraphs). A major gold massacre is probably brewing.
The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = -0.41% versus the XAU on 9-28, -2.21% on 9-27, -4.13% on 9-26, +0.40% on 9-25, +2.03% on 9-24, +0.07% versus the XAU on 9-21, -1.46% on 9-20, +0.69% on 9-19, -2.33% on 9-18, -0.53% on 9-17, +0.12% on 9-14, -1.34% on 9-13,+0.02% on 9-12, +0.25% on 9-11, -0.69% on 9-10, +0.42% on 9-7, -1.39% on 9-6, +0.06% on 9-5, -1.81% on 9-4, -0.98% on 8-31, -0.03% on 8-30, -1.86% on 8-29 = an extremely bearish -15.11% versus the XAU the past 22 sessions, see six month NEM Lead Indicator at http://finance.yahoo.com/q/ta?s=%5EXAU&t=6m&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem.
The latest gold COT (Commitments Of Traders) Data (5 day period ending 9-25) is very bearish, see the last/third data at http://www.cftc.gov/dea/options/deacmxsof.htm. The savvy non contrarian gold Commercial Traders continue to go massively short, adding a large 27,946 short gold futures and options contracts (over 17,000 the prior week and a massive 53,207 the week before that), while liquidating 2977 long gold futures and options contracts.
See Tuesday 9-25's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html for additional important precious metals sector analysis.
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
12:35 PM
