NDX (NASDAQ 100) Filled Friday's Upside Gap At 1998.67
NDX (NASDAQ 100) filled Friday's upside gap at 1998.67, see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. So far at least SPX (S & P 500) has failed to fill Friday's upside gap at 1478.55, 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=.
Based upon the Elliott Wave count, determined from looking at the NDX/SPX daily charts (http://stockcharts.com/charts/gallery.html?%24ndx), with a big assist from XLK (Technology Select Sector SPDR), which has a clear Elliott Wave 12345 up down up down up pattern from 8-16 to 9-4, see http://stockcharts.com/charts/gallery.html?xlk, also, there's a bearish large spike on Tuesday 9-4's XLK candle, this NDX/SPX upcycle that began early on Monday is very likely to be Wave B of Wave A of the big Wave C downcycle that probably/very likely began on 9-4.
The vertical NDX/SPX rise after bottoming early on Monday, see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, is a sign that this is probably a reflex rally/Wave B type move, but, that fact is secondary to the Elliott Wave count.
A great sanity check of the Elliott Wave count is the reliable WMT Lead Indicator, which nearly/seemingly always turns bearish ahead of downcycles and bullish ahead of upcycles. For example, the extremely 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) jives with NDX/SPX having entered a big Wave C downcycle on 9-4-07, that should bottom well below the Wave A cycle lows that occurred on 8-16-07 for NDX/SPX, see http://stockcharts.com/charts/gallery.html?%24ndx.
Often important cycle highs/lows occur shortly after gap filling action is completed, so, the fact that NDX filled (NASDAQ 100) filled Friday's upside gap at 1998.67 isn't a negative (http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=), it's just that if it clearly failed to fill it then it was a total no brainer that NDX was about to decline.
My strategy right now is to trade the UltraShort QQQ ProShares (QID, http://stockcharts.com/charts/gallery.html?qid), probably buying today, in order to catch Wave C of Wave A of Wave C, that should last about 3 to 5 days and bottom close to the Fed rate decision (very likely quarter to half point rate cut) on Tuesday 9-18.
I'm waiting for NDX's uptrend since early Monday to clearly break down on the intraday chart (an intraday Wave A type move), see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, then I'm going to look to buy the UltraShort QQQ ProShares (QID, http://stockcharts.com/charts/gallery.html?qid) when NDX does an intraday Wave B type rebound.
That is basically the same thing as waiting for QID to clearly break it's downtrend since early Monday (do an intraday Wave 1 upcycle), then look to buy during an intraday Wave 2 downcycle, see http://finance.yahoo.com/q/ta?s=qid&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=.
The 4 day SPX/NDX downcycle from 9-4 until early Monday (http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=) was probably/very likely Wave A of Wave A of a big Wave C downcycle. Wave C should bottom at 1700-1750 for NDX, well below the Wave A cycle low on 8-16 at 1805.66, see http://stockcharts.com/charts/gallery.html?%24ndx.
Note that in the downcycle from the July cycle high at 1555.90 to Thursday 8-16's cycle low (http://stockcharts.com/charts/gallery.html?%5Espx) that the Wave B up of that downcycle lasted a grand total of only TWO DAYS, which is a clear indication that the downcycle from the July cycle high at 1555.90 to Thursday 8-16's cycle low is probably only a Wave A downcycle.
The dramatic Wave A downcycle from the July cycle high at 1555.90 to 8-16's cycle low at 1370.60 triggered a major 5% follow through sell signal, which indicates that an SPX (S & P 500) Cyclical Bear Market probably began in July after peaking at 1555.90, to see the major sell signal see chart 1 at http://www.joefrocks.com/GoldStockCharts.html.
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
Based upon the Elliott Wave count, determined from looking at the NDX/SPX daily charts (http://stockcharts.com/charts/gallery.html?%24ndx), with a big assist from XLK (Technology Select Sector SPDR), which has a clear Elliott Wave 12345 up down up down up pattern from 8-16 to 9-4, see http://stockcharts.com/charts/gallery.html?xlk, also, there's a bearish large spike on Tuesday 9-4's XLK candle, this NDX/SPX upcycle that began early on Monday is very likely to be Wave B of Wave A of the big Wave C downcycle that probably/very likely began on 9-4.
The vertical NDX/SPX rise after bottoming early on Monday, see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, is a sign that this is probably a reflex rally/Wave B type move, but, that fact is secondary to the Elliott Wave count.
A great sanity check of the Elliott Wave count is the reliable WMT Lead Indicator, which nearly/seemingly always turns bearish ahead of downcycles and bullish ahead of upcycles. For example, the extremely 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) jives with NDX/SPX having entered a big Wave C downcycle on 9-4-07, that should bottom well below the Wave A cycle lows that occurred on 8-16-07 for NDX/SPX, see http://stockcharts.com/charts/gallery.html?%24ndx.
Often important cycle highs/lows occur shortly after gap filling action is completed, so, the fact that NDX filled (NASDAQ 100) filled Friday's upside gap at 1998.67 isn't a negative (http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=), it's just that if it clearly failed to fill it then it was a total no brainer that NDX was about to decline.
My strategy right now is to trade the UltraShort QQQ ProShares (QID, http://stockcharts.com/charts/gallery.html?qid), probably buying today, in order to catch Wave C of Wave A of Wave C, that should last about 3 to 5 days and bottom close to the Fed rate decision (very likely quarter to half point rate cut) on Tuesday 9-18.
I'm waiting for NDX's uptrend since early Monday to clearly break down on the intraday chart (an intraday Wave A type move), see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, then I'm going to look to buy the UltraShort QQQ ProShares (QID, http://stockcharts.com/charts/gallery.html?qid) when NDX does an intraday Wave B type rebound.
That is basically the same thing as waiting for QID to clearly break it's downtrend since early Monday (do an intraday Wave 1 upcycle), then look to buy during an intraday Wave 2 downcycle, see http://finance.yahoo.com/q/ta?s=qid&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=.
The 4 day SPX/NDX downcycle from 9-4 until early Monday (http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=) was probably/very likely Wave A of Wave A of a big Wave C downcycle. Wave C should bottom at 1700-1750 for NDX, well below the Wave A cycle low on 8-16 at 1805.66, see http://stockcharts.com/charts/gallery.html?%24ndx.
Note that in the downcycle from the July cycle high at 1555.90 to Thursday 8-16's cycle low (http://stockcharts.com/charts/gallery.html?%5Espx) that the Wave B up of that downcycle lasted a grand total of only TWO DAYS, which is a clear indication that the downcycle from the July cycle high at 1555.90 to Thursday 8-16's cycle low is probably only a Wave A downcycle.
The dramatic Wave A downcycle from the July cycle high at 1555.90 to 8-16's cycle low at 1370.60 triggered a major 5% follow through sell signal, which indicates that an SPX (S & P 500) Cyclical Bear Market probably began in July after peaking at 1555.90, to see the major sell signal see chart 1 at http://www.joefrocks.com/GoldStockCharts.html.
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
8:04 AM
