SPX/NDX Very Short Term Wave B Upcycle Appears To Be Peaking
The SPX/NDX very short term countertrend Wave B upcycle since early yesterday appears to be peaking, 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=. In the previous link one can see that NDX (NASDAQ 100) had a declining peaks downtrend toward session's end, so, it looks like NDX failed to fill Friday's upside gap at 1998.67 and SPX (S & P 500) failed to fill Friday's upside gap at 1478.55 (confirms, if they don't get filled, making them bearish breakaway gaps, that SPX/NDX hit a countertrend Wave B cycle high last Tuesday 9-4), but, we won't know until tomorrow.
The 4 day SPX/NDX downcycle from 9-4 until early yesterday (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 Wave A of Wave A of Wave C. 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. The upcycle from early yesterday that may have peaked late today is probably Wave B of Wave A of Wave C.
My strategy right now is to trade the UltraShort QQQ ProShares (QID), probably buying tomorrow, 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.
There should be two more good trading opportunities after that in the next few weeks, Wave A of Wave C of Wave C and Wave C of Wave C of Wave C, each lasting a few days. After the Fed rate decision on 9-18 there should be a bounce for a few days to maybe (but doubtful) a week, corresponding to Wave B of Wave C.
The Elliott Wave count means that SPX/NDX's Wave A of Wave C (began 9-4) is likely to bottom at about the time of the Fed rate decision (very likely quarter to half point rate cut) on Tuesday 9-18, so, the final Wave C cycle low probably won't occur until a few weeks after the Fed rate decision on Tuesday 9-18, which means that the likely scenario I discussed in recent days in which Wave C bottoms near 9-18 is no longer a likely scenario.
Right now it's all about watching SPX/NDX's upside gaps created on Friday at 1478.55 and 1998.67 (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=), to confirm, if they don't get filled (likely that they won't get filled), which would make them bearish breakaway gaps, that SPX/NDX hit a countertrend Wave B cycle high last Tuesday 9-4, see http://stockcharts.com/charts/gallery.html?%5Espx. One can even be more conservative and wait for a 2% follow through sell signal before looking to trade short.
Once I'm convinced that NDX (NASDAQ 100) won't fill it's upside gap created on Friday at 1998.67 (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=) I'm going to look to buy UltraShort QQQ ProShares (QID), which appears to have completed an Elliott Wave ABC down up down monthly downcycle on Tuesday 9-4, see chart 1 at http://stockcharts.com/charts/gallery.html?qid.
As discussed the previous five days, SPX and NDX's Wave B Elliott Wave count is deceptive, since they appear to have hit Wave 3 cycle highs on Tuesday 9-4 (up down up pattern on the daily chart from 8-16's SPX/NDX cycle low to 9-4's cycle high), when in fact they're probably final Wave 5 cycle highs. The rally on 8-16 into 8-17 was probably Wave 1, 8-17/8-20's decline was Wave 2, which would make Tuesday's cycle high a third/final Wave 5 cycle high for SPX/NDX, see http://stockcharts.com/charts/gallery.html?%24spx.
This jives with the Technology Select Sector SPDR (XLK) having 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.
Also, the WMT Lead Indicator is bearish recently, at +0.23% versus SPX (S & P 500) today/on 9-11, at -0.15% versus SPX (S & P 500) on 9-10, at +0.82% versus SPX (S & P 500) on 9-7, at +0.30% versus SPX (S & P 500) on 9-6, at -0.81% versus SPX (S & P 500) 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/NDX having entered Wave C of their major downcycle since the July cycle high at 1555.90.
Notice on the daily chart that UltraShort QQQ ProShares (QID) appears to have completed an Elliott Wave ABC down up down monthly downcycle on Tuesday 9-4, see chart 1 at http://stockcharts.com/charts/gallery.html?qid. I'll probably trade QID once I'm convinced that NDX has peaked. It's a similar technical situation to SPX's. NDX didn't hit a sell signal today. It needs to break it's Wave B uptrendline since 8-16 then follow through by 2%+ in order to hit a sell signal.
If QID bottomed on Tuesday I'll probably wait for a short term Wave 2 downcycle before looking to buy with the intention of holding for a few sessions. It almost always makes sense to wait for a buy signal (the expected action, a strong multi day short term Wave 1 upcycle), then buy during a Wave 2 type pullback.
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.
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.
After Wave C downcycle bottoms THEN a respectable lengthy multi month intermediate term upcycle should occur for SPX.
The NEM Lead Indicator = +0.25% versus the XAU today/on 9-11, -0.69% versus the XAU 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 -6.03% versus the XAU the past nine 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.
Gold's Wave B of it's Wave 2 Cyclical Bear Market since 5-11-06 surprised to the upside the past week, see charts 1 and 2 at http://stockcharts.com/charts/gallery.html?$GOLD, taking out April's cycle high at $698 that appeared to be the Wave B cycle high of the Wave 2 Cyclical Bear Market since 5-11-06 (Wave 1 Cyclical Bull Market cycle high that occurred at $730.40 on 5-11-06). The huge spike move is typical of what happens near very important cycle highs, and, Wave B may have peaked or should do so this week.
Most of the amateur wannabe gold analysts (some were just born into rich families and are pretending to be gold "gurus") have led and continue to lead most people to a financial disaster. There are far too many dingbats pretending to be gold analysts/timers in the gold/silver sector.
Wave A bottomed at $542.27 in June 2006 and the Wave 1 Cyclical Bull Market cycle high occurred at $730.40 on 5-11-06, see http://stockcharts.com/charts/gallery.html?$GOLD. From April 2007 until today gold managed to rise about 3% in five months, which is obviously not a Bull Market uptrend. Only a gold "guru" would think that's a Bull Market.
I'm pretty much abandoning the rockets trading strategy for now, but, I may daytrade rockets or do very modest rocket trading. In a healthy market/economy the rockets trading strategy may work very well, but, one should still probably trade baskets of stocks in a sector or index to get a good risk/reward ratio, and, to smooth out the uncertainty involved in trading individual stocks.
Broad based market indexes and sector indexes have much more predictable cycles and Elliott Wave patterns than individual stocks, because, the "uncertainties" (upside and downside surprises) of stocks in a given index will have a strong tendency to cancel/smooth out the uncertainty of the individual stock components. There will obviously be both upside and downside surprises for components in any index, that will tend to cancel/smooth out the uncertainty of timing that index, relative to timing an individual stock.
The best way to trade aggressively long is to trade volatile ETFs or a high relative strength basket of stocks of a sector or index (low relative strength for short selling).I'm probably going to trade only index and sector ETFs for a few months, so, I'm not going to be discussing individual stocks, unless I trade a basket of stocks in a given sector, like I used to do in the previous Wave 1 HUI/XAU Cyclical Bull Market that ended on 5-11-06.
In this market especially, even if you're a daredevil, it makes a lot of sense to wait for a strong short term Wave 1 upcycle to trigger a monthly or intermediate term cycle buy signal, then look to buy late in a short term Wave 2 downcycle or early in Wave 3 up. Using cycle trendlines also makes a lot of sense. Usually at least one important trendline (important short term at least) will be broken before one should look to buy.
Often a bullish large inverse spike will occur when a cycle low occurs, which is a sign to look to go long. Conversely, often a bearish large spike will occur when a cycle high occurs, which is a sign to look to exit a long position.
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 4 day SPX/NDX downcycle from 9-4 until early yesterday (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 Wave A of Wave A of Wave C. 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. The upcycle from early yesterday that may have peaked late today is probably Wave B of Wave A of Wave C.
My strategy right now is to trade the UltraShort QQQ ProShares (QID), probably buying tomorrow, 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.
There should be two more good trading opportunities after that in the next few weeks, Wave A of Wave C of Wave C and Wave C of Wave C of Wave C, each lasting a few days. After the Fed rate decision on 9-18 there should be a bounce for a few days to maybe (but doubtful) a week, corresponding to Wave B of Wave C.
The Elliott Wave count means that SPX/NDX's Wave A of Wave C (began 9-4) is likely to bottom at about the time of the Fed rate decision (very likely quarter to half point rate cut) on Tuesday 9-18, so, the final Wave C cycle low probably won't occur until a few weeks after the Fed rate decision on Tuesday 9-18, which means that the likely scenario I discussed in recent days in which Wave C bottoms near 9-18 is no longer a likely scenario.
Right now it's all about watching SPX/NDX's upside gaps created on Friday at 1478.55 and 1998.67 (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=), to confirm, if they don't get filled (likely that they won't get filled), which would make them bearish breakaway gaps, that SPX/NDX hit a countertrend Wave B cycle high last Tuesday 9-4, see http://stockcharts.com/charts/gallery.html?%5Espx. One can even be more conservative and wait for a 2% follow through sell signal before looking to trade short.
Once I'm convinced that NDX (NASDAQ 100) won't fill it's upside gap created on Friday at 1998.67 (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=) I'm going to look to buy UltraShort QQQ ProShares (QID), which appears to have completed an Elliott Wave ABC down up down monthly downcycle on Tuesday 9-4, see chart 1 at http://stockcharts.com/charts/gallery.html?qid.
As discussed the previous five days, SPX and NDX's Wave B Elliott Wave count is deceptive, since they appear to have hit Wave 3 cycle highs on Tuesday 9-4 (up down up pattern on the daily chart from 8-16's SPX/NDX cycle low to 9-4's cycle high), when in fact they're probably final Wave 5 cycle highs. The rally on 8-16 into 8-17 was probably Wave 1, 8-17/8-20's decline was Wave 2, which would make Tuesday's cycle high a third/final Wave 5 cycle high for SPX/NDX, see http://stockcharts.com/charts/gallery.html?%24spx.
This jives with the Technology Select Sector SPDR (XLK) having 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.
Also, the WMT Lead Indicator is bearish recently, at +0.23% versus SPX (S & P 500) today/on 9-11, at -0.15% versus SPX (S & P 500) on 9-10, at +0.82% versus SPX (S & P 500) on 9-7, at +0.30% versus SPX (S & P 500) on 9-6, at -0.81% versus SPX (S & P 500) 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/NDX having entered Wave C of their major downcycle since the July cycle high at 1555.90.
Notice on the daily chart that UltraShort QQQ ProShares (QID) appears to have completed an Elliott Wave ABC down up down monthly downcycle on Tuesday 9-4, see chart 1 at http://stockcharts.com/charts/gallery.html?qid. I'll probably trade QID once I'm convinced that NDX has peaked. It's a similar technical situation to SPX's. NDX didn't hit a sell signal today. It needs to break it's Wave B uptrendline since 8-16 then follow through by 2%+ in order to hit a sell signal.
If QID bottomed on Tuesday I'll probably wait for a short term Wave 2 downcycle before looking to buy with the intention of holding for a few sessions. It almost always makes sense to wait for a buy signal (the expected action, a strong multi day short term Wave 1 upcycle), then buy during a Wave 2 type pullback.
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.
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.
After Wave C downcycle bottoms THEN a respectable lengthy multi month intermediate term upcycle should occur for SPX.
The NEM Lead Indicator = +0.25% versus the XAU today/on 9-11, -0.69% versus the XAU 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 -6.03% versus the XAU the past nine 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.
Gold's Wave B of it's Wave 2 Cyclical Bear Market since 5-11-06 surprised to the upside the past week, see charts 1 and 2 at http://stockcharts.com/charts/gallery.html?$GOLD, taking out April's cycle high at $698 that appeared to be the Wave B cycle high of the Wave 2 Cyclical Bear Market since 5-11-06 (Wave 1 Cyclical Bull Market cycle high that occurred at $730.40 on 5-11-06). The huge spike move is typical of what happens near very important cycle highs, and, Wave B may have peaked or should do so this week.
Most of the amateur wannabe gold analysts (some were just born into rich families and are pretending to be gold "gurus") have led and continue to lead most people to a financial disaster. There are far too many dingbats pretending to be gold analysts/timers in the gold/silver sector.
Wave A bottomed at $542.27 in June 2006 and the Wave 1 Cyclical Bull Market cycle high occurred at $730.40 on 5-11-06, see http://stockcharts.com/charts/gallery.html?$GOLD. From April 2007 until today gold managed to rise about 3% in five months, which is obviously not a Bull Market uptrend. Only a gold "guru" would think that's a Bull Market.
I'm pretty much abandoning the rockets trading strategy for now, but, I may daytrade rockets or do very modest rocket trading. In a healthy market/economy the rockets trading strategy may work very well, but, one should still probably trade baskets of stocks in a sector or index to get a good risk/reward ratio, and, to smooth out the uncertainty involved in trading individual stocks.
Broad based market indexes and sector indexes have much more predictable cycles and Elliott Wave patterns than individual stocks, because, the "uncertainties" (upside and downside surprises) of stocks in a given index will have a strong tendency to cancel/smooth out the uncertainty of the individual stock components. There will obviously be both upside and downside surprises for components in any index, that will tend to cancel/smooth out the uncertainty of timing that index, relative to timing an individual stock.
The best way to trade aggressively long is to trade volatile ETFs or a high relative strength basket of stocks of a sector or index (low relative strength for short selling).I'm probably going to trade only index and sector ETFs for a few months, so, I'm not going to be discussing individual stocks, unless I trade a basket of stocks in a given sector, like I used to do in the previous Wave 1 HUI/XAU Cyclical Bull Market that ended on 5-11-06.
In this market especially, even if you're a daredevil, it makes a lot of sense to wait for a strong short term Wave 1 upcycle to trigger a monthly or intermediate term cycle buy signal, then look to buy late in a short term Wave 2 downcycle or early in Wave 3 up. Using cycle trendlines also makes a lot of sense. Usually at least one important trendline (important short term at least) will be broken before one should look to buy.
Often a bullish large inverse spike will occur when a cycle low occurs, which is a sign to look to go long. Conversely, often a bearish large spike will occur when a cycle high occurs, which is a sign to look to exit a long position.
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
1:09 PM
