SPX (S & P 500) Cycles And Elliott Wave Count
SPX (S & P 500) put in a likely Cyclical Bull Market cycle high at 1555.90 in July 2007 (http://stockcharts.com/charts/gallery.html?%24spx), for the cycle that began in October 2002, because, it's primary trendline broke down, triggering a 5% follow through major sell signal, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html.
The Wave A downcycle for SPX (S & P 500) was the decline from the July cycle high/likely Cyclical Bull Market cycle high at 1555.90 (cycle began in October 2002), see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, to 8-16's cycle low at 1370.60, see http://stockcharts.com/charts/gallery.html?%24spx.
The countertrend Wave B upcycle for SPX (S & P 500) was the upcycle from 8-16-07 that probably peaked on 9-19-07 at 1538.74 (note the bearish large spike on 9-19's candle), see http://stockcharts.com/charts/gallery.html?%24spx.
Since Wednesday 9-19-07's likely Wave B cycle high at 1538.74 SPX did a 4 day Wave A downcycle, and, entered a countertrend Wave B type upcycle early on Tuesday 9-25, 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=, that may have peaked late today.
Massive Fed credit recently has been a big factor propping the market up/holding it together, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE. The Fed wants their half point (0.50%) Fed Funds rate cut on 9-18 to look like a success. SPX only rallied 3-4 hours after the rate cut, largely because it's Cyclical Bull Market probably peaked in July at 1555.90, AND, it was near the end of a countertrend Wave B upcycle, that had been in effect for slightly over a month (began 8-16-07) when the rate cut occurred on 9-18-07.
Today the Fed added a massive $38 Billion in credit, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, and, the major averages were only able to rally modestly (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 is obviously a bearish sign.
Another bearish sign is that the WMT Lead Indicator was very bullish at greater than +1.00% versus SPX ( S & P 500) early in the session, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, yet SPX only rallied modestly. Most major averages and sector indexes should soon begin to decline substantially.
Given the massive Fed credit recently one can't rule out SPX challenging the likely Wave B cycle high that occurred on 9-19 (http://stockcharts.com/charts/gallery.html?%24spx), but, since the WMT Lead Indicator turned bearish (gap with SPX started to narrow, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC) less than 3 hours into today's session, it appears that 9-19's likely Wave B cycle high will hold.
On Friday I'll be looking to day trade UltraShort QQQ ProShares (QID), see chart 1 at http://stockcharts.com/charts/gallery.html?qid.
The WMT Lead Indicator is bearish recently, at +0.33% versus SPX (S & P 500) today/on 9-27 (turned bearish less than 3 hours into the session), at -0.22% on 9-26, at -1.81% on 9-25, at -0.06% on 9-24, at -0.65% on 9-21, at -0.29% on 9-20, +0.09% on 9-19, -0.33% on 9-18, at +0.51% on 9-17, at +0.58% on 9-14, at -0.02% on 9-13, at -0.55% on 9-12, at +0.23% on 9-11, at -0.15% on 9-10, at +0.82% on 9-7, at +0.30% on 9-6, at -0.81% on 9-5, -1.81% on 9-4, -0.40% on 8-31, -1.55% on 8-30, -0.37% on 8-29, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=on&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, which jives with SPX (http://stockcharts.com/charts/gallery.html?%24spx) soon entering Wave C of the major downcycle since the July cycle high (probably did on 9-19).
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 SPX soon entering a big Wave C downcycle (probably did on 9-19), that should bottom well below the Wave A cycle lows that occurred on 8-16-07 for SPX, see http://stockcharts.com/charts/gallery.html?%24spx.
Note that in the likely Wave A 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 2 at http://www.joefrocks.com/GoldStockCharts.html.
The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = -2.21% versus the XAU today/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 -14.70% versus the XAU the past 21 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.
See Tuesday'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
The Wave A downcycle for SPX (S & P 500) was the decline from the July cycle high/likely Cyclical Bull Market cycle high at 1555.90 (cycle began in October 2002), see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, to 8-16's cycle low at 1370.60, see http://stockcharts.com/charts/gallery.html?%24spx.
The countertrend Wave B upcycle for SPX (S & P 500) was the upcycle from 8-16-07 that probably peaked on 9-19-07 at 1538.74 (note the bearish large spike on 9-19's candle), see http://stockcharts.com/charts/gallery.html?%24spx.
Since Wednesday 9-19-07's likely Wave B cycle high at 1538.74 SPX did a 4 day Wave A downcycle, and, entered a countertrend Wave B type upcycle early on Tuesday 9-25, 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=, that may have peaked late today.
Massive Fed credit recently has been a big factor propping the market up/holding it together, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE. The Fed wants their half point (0.50%) Fed Funds rate cut on 9-18 to look like a success. SPX only rallied 3-4 hours after the rate cut, largely because it's Cyclical Bull Market probably peaked in July at 1555.90, AND, it was near the end of a countertrend Wave B upcycle, that had been in effect for slightly over a month (began 8-16-07) when the rate cut occurred on 9-18-07.
Today the Fed added a massive $38 Billion in credit, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, and, the major averages were only able to rally modestly (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 is obviously a bearish sign.
Another bearish sign is that the WMT Lead Indicator was very bullish at greater than +1.00% versus SPX ( S & P 500) early in the session, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, yet SPX only rallied modestly. Most major averages and sector indexes should soon begin to decline substantially.
Given the massive Fed credit recently one can't rule out SPX challenging the likely Wave B cycle high that occurred on 9-19 (http://stockcharts.com/charts/gallery.html?%24spx), but, since the WMT Lead Indicator turned bearish (gap with SPX started to narrow, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC) less than 3 hours into today's session, it appears that 9-19's likely Wave B cycle high will hold.
On Friday I'll be looking to day trade UltraShort QQQ ProShares (QID), see chart 1 at http://stockcharts.com/charts/gallery.html?qid.
The WMT Lead Indicator is bearish recently, at +0.33% versus SPX (S & P 500) today/on 9-27 (turned bearish less than 3 hours into the session), at -0.22% on 9-26, at -1.81% on 9-25, at -0.06% on 9-24, at -0.65% on 9-21, at -0.29% on 9-20, +0.09% on 9-19, -0.33% on 9-18, at +0.51% on 9-17, at +0.58% on 9-14, at -0.02% on 9-13, at -0.55% on 9-12, at +0.23% on 9-11, at -0.15% on 9-10, at +0.82% on 9-7, at +0.30% on 9-6, at -0.81% on 9-5, -1.81% on 9-4, -0.40% on 8-31, -1.55% on 8-30, -0.37% on 8-29, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=on&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, which jives with SPX (http://stockcharts.com/charts/gallery.html?%24spx) soon entering Wave C of the major downcycle since the July cycle high (probably did on 9-19).
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 SPX soon entering a big Wave C downcycle (probably did on 9-19), that should bottom well below the Wave A cycle lows that occurred on 8-16-07 for SPX, see http://stockcharts.com/charts/gallery.html?%24spx.
Note that in the likely Wave A 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 2 at http://www.joefrocks.com/GoldStockCharts.html.
The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = -2.21% versus the XAU today/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 -14.70% versus the XAU the past 21 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.
See Tuesday'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
1:17 PM
