The WMT Lead Indicator Was A Very Bearish -1.81% Versus SPX (S & P 500) Today
The WMT Lead Indicator was a very bearish -1.81% versus SPX (S & P 500) today, 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. The NEM Lead Indicator was also a very bearish -1.81% versus the XAU today, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem.
Looking at SPX's (S & P 500) daily chart (http://stockcharts.com/charts/gallery.html?%5Espx) I would normally say that SPX is in a Wave 3 upcycle, and, it might be (up down up pattern), but, given that SPX is probably in a countertrend Wave B upcycle since bottoming at 1370.60 on 8-16, and, that the WMT Lead Indicator is very bearish the past four sessions (-1.81% versus SPX on 9-4, -0.40% on 8-31, -1.55% on 8-30, -0.37% on 8-2), there's probably a good chance that SPX is in a deceptive third/final Wave 5 upcycle of it's countertrend Wave B upcycle since bottoming at 1370.60 on 8-16.
SPX's (S & P 500) (http://stockcharts.com/charts/gallery.html?%5Espx) sharp rally from 8-16 into 8-17 might have been Wave 1, then 8-20's significant decline might have been Wave 2 down, which would make the current short term upcycle a third/final Wave 5 upcycle of it's countertrend Wave B upcycle since bottoming at 1370.60 on 8-16.
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 that vicious Wave C downcycle bottoms, following the current Wave B, THEN a respectable lengthy multi month intermediate term upcycle should occur for SPX.
Reliable SPX/market lead indicator WMT put in a bullish slightly higher Wave 2 double bottom cycle low at 42.96 on Monday 8-20 versus at 42.92 early on Thursday 8-16, which is/has been a short term positive for the market, see http://stockcharts.com/charts/gallery.html?wmt.
I'll be looking to day trade the Ultra Short SPX ETF SDS or some other ETF/stock (like QID) early on Wednesday.
Notice on the daily chart that UltraShort QQQ ProShares (QID) appears to be completing an Elliott Wave ABC down up down monthly downcycle, 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.
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
Looking at SPX's (S & P 500) daily chart (http://stockcharts.com/charts/gallery.html?%5Espx) I would normally say that SPX is in a Wave 3 upcycle, and, it might be (up down up pattern), but, given that SPX is probably in a countertrend Wave B upcycle since bottoming at 1370.60 on 8-16, and, that the WMT Lead Indicator is very bearish the past four sessions (-1.81% versus SPX on 9-4, -0.40% on 8-31, -1.55% on 8-30, -0.37% on 8-2), there's probably a good chance that SPX is in a deceptive third/final Wave 5 upcycle of it's countertrend Wave B upcycle since bottoming at 1370.60 on 8-16.
SPX's (S & P 500) (http://stockcharts.com/charts/gallery.html?%5Espx) sharp rally from 8-16 into 8-17 might have been Wave 1, then 8-20's significant decline might have been Wave 2 down, which would make the current short term upcycle a third/final Wave 5 upcycle of it's countertrend Wave B upcycle since bottoming at 1370.60 on 8-16.
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 that vicious Wave C downcycle bottoms, following the current Wave B, THEN a respectable lengthy multi month intermediate term upcycle should occur for SPX.
Reliable SPX/market lead indicator WMT put in a bullish slightly higher Wave 2 double bottom cycle low at 42.96 on Monday 8-20 versus at 42.92 early on Thursday 8-16, which is/has been a short term positive for the market, see http://stockcharts.com/charts/gallery.html?wmt.
I'll be looking to day trade the Ultra Short SPX ETF SDS or some other ETF/stock (like QID) early on Wednesday.
Notice on the daily chart that UltraShort QQQ ProShares (QID) appears to be completing an Elliott Wave ABC down up down monthly downcycle, 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.
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
1:16 PM
