HUI/XAU's Countertrend Wave B Of The Wave 2 Cyclical Bear Market May Have Peaked Today, Putting In A Bearish Double Top
HUI/XAU's countertrend Wave B of the Wave 2 Cyclical Bear Market since 5-11-06 may have peaked early today (http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=), with HUI putting in (potentially) a bearish double top at 402.27, only 0.14% above the Wave 1 Cyclical Bull Market cycle high at 401.69 on 5-11-06, see http://stockcharts.com/charts/gallery.html?%24hui, and, with the XAU putting in (potentially) a bearish double top at 173.17, only 0.85% above the Wave 1 Cyclical Bull Market cycle high at 171.71 on 5-11-06, see http://stockcharts.com/charts/gallery.html?%24xau. The huge spike move since 8-16-07 is typical of what happens near very important cycle highs.
While Wave B cycle highs technically should be below the "ultimate" cycle highs, the market isn't an exact science (definitely a science though), indexes' components are changed periodically, and, often cycle highs will occur in dramatic rollover mode, that's very similar to a countertrend Wave B upcycle (basically the same as a Wave B when double tops occur, which is what might have happened today with HUI/XAU). The point being that, if one was in a basket of HUI or XAU components, the time to sell was in May 2006 not September 2007.
HUI/XAU should head down to their primary multi year Secular Bull Market (since late 2000) trendlines at 220ish and 90ish in the next 3-6 months, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. Gold should head down to it's primary multi year Secular Bull Market (since April 2001) trendline at $475-500 in the next 3-6 months.
The NEM Lead Indicator is SCARY. The NEM Lead Indicator = -1.46% versus the XAU yesterday/on 9-20, +0.69% versus the XAU on 9-19, -2.33% versus the XAU 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 -10.86% versus the XAU the past 16 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.
Fundamentally, the current deflationary real estate/mortgage bust is a major negative for gold, just as the inflationary real estate/mortgage boom from 2002-2006 was a major positive for gold, coinciding with gold's Wave 1 Cyclical Bull Market from April 2001 until May 2006. Gold does well in inflationary economic cycles and gold does poorly in deflationary economic cycles, which is pretty basic stuff that a true gold analyst would understand.
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.
....... http://www.JoeFRocks.com/ .
HUI NEM XAU
While Wave B cycle highs technically should be below the "ultimate" cycle highs, the market isn't an exact science (definitely a science though), indexes' components are changed periodically, and, often cycle highs will occur in dramatic rollover mode, that's very similar to a countertrend Wave B upcycle (basically the same as a Wave B when double tops occur, which is what might have happened today with HUI/XAU). The point being that, if one was in a basket of HUI or XAU components, the time to sell was in May 2006 not September 2007.
HUI/XAU should head down to their primary multi year Secular Bull Market (since late 2000) trendlines at 220ish and 90ish in the next 3-6 months, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. Gold should head down to it's primary multi year Secular Bull Market (since April 2001) trendline at $475-500 in the next 3-6 months.
The NEM Lead Indicator is SCARY. The NEM Lead Indicator = -1.46% versus the XAU yesterday/on 9-20, +0.69% versus the XAU on 9-19, -2.33% versus the XAU 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 -10.86% versus the XAU the past 16 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.
Fundamentally, the current deflationary real estate/mortgage bust is a major negative for gold, just as the inflationary real estate/mortgage boom from 2002-2006 was a major positive for gold, coinciding with gold's Wave 1 Cyclical Bull Market from April 2001 until May 2006. Gold does well in inflationary economic cycles and gold does poorly in deflationary economic cycles, which is pretty basic stuff that a true gold analyst would understand.
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.
....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
7:26 AM
