A Likely Scenario For SPX/NDX/Most Indexes/The Market
A likely scenario for SPX/NDX/most indexes/the market is that, assuming the countertrend Wave B upcycle (began 8-16-07 for SPX/NDX, http://stockcharts.com/charts/gallery.html?%24spx) peaked last Tuesday 9-4, then SPX/NDX/most indexes/the market will be very weak and experience a nasty Wave C downcycle (probably began on 9-4-07) until about the time of the Fed's rate decision (on 9-18) and likely quarter to half point cut in the Fed Funds rate and the Discount rate, then, SPX/NDX/most indexes/the market will probably bottom shortly before or after the Fed's rate decision on 9-18-07.
The next six or seven trading sessions are likely to be brutal, and, would be par for the course in September, and, jives with the very bearish six month WMT Lead Indicator, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=6m&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC.
The reason why nearly all broad based and sector indexes usually get hammered in a major downcycle is computerized program trading, with the S & P 500 (SPX) being the key lead index. Most/all sectors are represented in SPX, so, when SPX gets whacked, nearly all sectors/indexes get whacked due to automated selling.
For example, NEM and FCX are in SPX, so, when SPX gets whacked HUI/XAU get whacked and then THOSE indexes' components are sold automatically. Also, stocks like PAAS, CDE, HL, etc, that are/may be in various broad market indexes, once those indexes get whacked they get sold automatically. There's a cascading effect to nearly all indexes I think once SPX becomes weak (or strong). The people that got excited by gold's huge spike this week will probably get crushed next week.
If SPX (S & P 500) fails to fill Friday's upside gap at 1478.55 early next week (NDX upside gap at 1998.67), 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=, which would make it a bearish breakaway gap, then that will confirm that Tuesday 9-4's cycle high was a countertrend Wave B cycle high.
From the NY Times, part of the article, click on link (http://www.nytimes.com/2007/09/08/business/08econ.html) to see entire article:
"The Labor Department reported yesterday that 4,000 jobs were lost from July to August, and the deepest cuts were in industries that are connected to the housing market, like construction and manufacturing. It was the first employment decline since 2003, when the job market was still struggling to emerge from the slump after the 2001 recession.
The jobs report all but guarantees that the Fed will cut its benchmark short-term interest rate when its policy-making committee meets on Sept. 18. A quarter-point reduction, to 5 percent, remains the most likely move, although a half-point cut now cannot be ruled out, economists said.
The unexpected weakness in employment changed the terms of the debate over the health of the economy. Before the report was released, most economists were predicting that the economy had added about 100,000 jobs in August and that growth had slowed but continued.
But now, the odds of a recession in the next year have risen, to 25 to 50 percent, economists interviewed yesterday said. A recession is typically defined as an extended period in which the economy shrinks, leading to a rise in unemployment and a drop in consumer spending and business investment.
“People need to start thinking about the housing market not just as some ring-fence problem which is off on its own,” said Nigel Gault, chief United States economist at Global Insight, an economic research firm in Lexington, Mass. “They need to start worrying about the health of the broader economy.” "
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 next six or seven trading sessions are likely to be brutal, and, would be par for the course in September, and, jives with the very bearish six month WMT Lead Indicator, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=6m&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC.
The reason why nearly all broad based and sector indexes usually get hammered in a major downcycle is computerized program trading, with the S & P 500 (SPX) being the key lead index. Most/all sectors are represented in SPX, so, when SPX gets whacked, nearly all sectors/indexes get whacked due to automated selling.
For example, NEM and FCX are in SPX, so, when SPX gets whacked HUI/XAU get whacked and then THOSE indexes' components are sold automatically. Also, stocks like PAAS, CDE, HL, etc, that are/may be in various broad market indexes, once those indexes get whacked they get sold automatically. There's a cascading effect to nearly all indexes I think once SPX becomes weak (or strong). The people that got excited by gold's huge spike this week will probably get crushed next week.
If SPX (S & P 500) fails to fill Friday's upside gap at 1478.55 early next week (NDX upside gap at 1998.67), 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=, which would make it a bearish breakaway gap, then that will confirm that Tuesday 9-4's cycle high was a countertrend Wave B cycle high.
From the NY Times, part of the article, click on link (http://www.nytimes.com/2007/09/08/business/08econ.html) to see entire article:
"The Labor Department reported yesterday that 4,000 jobs were lost from July to August, and the deepest cuts were in industries that are connected to the housing market, like construction and manufacturing. It was the first employment decline since 2003, when the job market was still struggling to emerge from the slump after the 2001 recession.
The jobs report all but guarantees that the Fed will cut its benchmark short-term interest rate when its policy-making committee meets on Sept. 18. A quarter-point reduction, to 5 percent, remains the most likely move, although a half-point cut now cannot be ruled out, economists said.
The unexpected weakness in employment changed the terms of the debate over the health of the economy. Before the report was released, most economists were predicting that the economy had added about 100,000 jobs in August and that growth had slowed but continued.
But now, the odds of a recession in the next year have risen, to 25 to 50 percent, economists interviewed yesterday said. A recession is typically defined as an extended period in which the economy shrinks, leading to a rise in unemployment and a drop in consumer spending and business investment.
“People need to start thinking about the housing market not just as some ring-fence problem which is off on its own,” said Nigel Gault, chief United States economist at Global Insight, an economic research firm in Lexington, Mass. “They need to start worrying about the health of the broader economy.” "
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
12:52 PM
