A Gold Sector Massacre Is Rapidly Approaching
A gold sector massacre is rapidly approaching, and, actually began after HUI/XAU's bearish double top on 10-11-07/10-15-07 (http://stockcharts.com/charts/gallery.html?%24hui), which was very likely the Wave 1 Cyclical Bull Market since late 2000 peaking in dramatic rollover mode versus the 5-11-06 cycle highs at 401.69/171.71, and, the only reason that HUI/XAU took out their 5-11-06 cycle highs was probably the huge M2 money supply spike in August due to the mortgage/credit crisis, see http://tradethecycles.blogspot.com/2007/10/huge-spike-in-m2-money-supply-occurred.html.
All of HUI/XAU's 5%ish upside versus the 5-11-06 cycle highs came during a few sessions in October 2007. One would have been better off in a money market account, and, on a risk adjusted basis, forget about it.
90%+ of the gold writers don't have a clue regarding gold sector timing, and, some of the best known gold writers are the some of worst, because they tend to have an oddball or weak minded bullish gold agenda (there are probably a few con artists also). The gold sector is littered with some very odd characters and goofy nitwits. All HUI/XAU did from 5-11-06 until 10-11-07 was rise about 5%.
HUI/XAU are about 50% above their primary Secular Bull market trendlines, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. This means that in the next year or so many gold stocks will fall much more than 50%, and, some might fall 50% or more in the next few weeks. Have you seen a single gold writer use primary trendlines and point out how untimely HUI/XAU are, which is basic technical analysis?
From a long term investors point of view the only time a market or stock is timely is near it's primary trendline. Basic technical analysis. A lot of fortunes will be destroyed in the next few weeks/months.
The following paragraphs are from a previous post.
The recent gold COT (Commitments Of Traders) data is extremely bearish, see the last/third data at http://www.cftc.gov/dea/options/deacmxsof.htm. The savvy non contrarian gold Commercial Traders continue to go massively short in the five day period ending 10-16-07, adding a large 19,360 short gold futures and options contracts (added 16,788 two weeks ago, added 1751 three weeks ago, added 27,946 four weeks ago, added over 17,000 five weeks ago, and, added a massive 53,207 six weeks ago), while adding 5075 (liquidated 192 two weeks ago, liquidated 5492 three weeks ago, liquidated 2977 four weeks ago) long gold futures and options contracts, correctly anticipating the recent strength.
HUI/XAU put in bearish double top cycle highs on Monday 10-15-07 with Thursday 10-11-07's cycle highs, see http://stockcharts.com/charts/gallery.html?%24hui, which is probably the Cyclical Bull Market since late 2000 peaking in dramatic rollover mode versus 5-11-06's cycle highs.
For all practical purposes HUI's Wave 1 Cyclical Bull Market ended on 5-11-06 at 401.69 (XAU at 171.71). HUI/XAU/gold have only risen about 5% from 5-11-06 to the recent cycle highs. Technically HUI/XAU's Wave 1 Cyclical Bull Market is peaking (HUI probably did on 10-11-07, XAU on Monday 10-15-07) in dramatic rollover mode versus 5-11-06's cycle highs at 401.69/171.71 (http://stockcharts.com/charts/gallery.html?%24hui).
Once a sell signal occurs it's time to exit. Actually, I hopefully exit earlier using the Elliott Wave count. The 5% major sell signal, see annotated charts 15 and 18 at http://www.joefrocks.com/GoldStockCharts.html, that occurred in May 2006, correctly indicated that it was time to turn bearish on HUI/XAU.
The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = +0.32% versus the XAU on 10-24, -1.33% on 10-23, +0.91% on 10-22 (yes, same as Friday), +0.91% on 10-19, -0.88% on 10-18, -2.00% on 10-17, +1.11% on 10-16, -0.31% on 10-15, -0.19% on 10-12, +1.62% on 10-11, -1.28% on 10-10, -0.25% on 10-9, -0.06% on 10-8, -0.57% on 10-5, -1.17% on 10-4, +0.37% on 10-3, +1.35% on 10-2, +0.33% on 10-1, -0.41% on 9-28, -2.21% on 9-27, -4.13% on 9-26, +0.40% on 9-25, +2.03% on 9-24, +0.07% 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 -16.23% versus the XAU the past 40 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 has been lagging HUI/XAU as it tends to do. Gold was still rising after HUI/XAU peaked (http://stockcharts.com/charts/gallery.html?%24gold). HUI probably/very likely peaked on 10-11-07 and the XAU probably/very likely peaked on 10-15-07.
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 (basically) 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
All of HUI/XAU's 5%ish upside versus the 5-11-06 cycle highs came during a few sessions in October 2007. One would have been better off in a money market account, and, on a risk adjusted basis, forget about it.
90%+ of the gold writers don't have a clue regarding gold sector timing, and, some of the best known gold writers are the some of worst, because they tend to have an oddball or weak minded bullish gold agenda (there are probably a few con artists also). The gold sector is littered with some very odd characters and goofy nitwits. All HUI/XAU did from 5-11-06 until 10-11-07 was rise about 5%.
HUI/XAU are about 50% above their primary Secular Bull market trendlines, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. This means that in the next year or so many gold stocks will fall much more than 50%, and, some might fall 50% or more in the next few weeks. Have you seen a single gold writer use primary trendlines and point out how untimely HUI/XAU are, which is basic technical analysis?
From a long term investors point of view the only time a market or stock is timely is near it's primary trendline. Basic technical analysis. A lot of fortunes will be destroyed in the next few weeks/months.
The following paragraphs are from a previous post.
The recent gold COT (Commitments Of Traders) data is extremely bearish, see the last/third data at http://www.cftc.gov/dea/options/deacmxsof.htm. The savvy non contrarian gold Commercial Traders continue to go massively short in the five day period ending 10-16-07, adding a large 19,360 short gold futures and options contracts (added 16,788 two weeks ago, added 1751 three weeks ago, added 27,946 four weeks ago, added over 17,000 five weeks ago, and, added a massive 53,207 six weeks ago), while adding 5075 (liquidated 192 two weeks ago, liquidated 5492 three weeks ago, liquidated 2977 four weeks ago) long gold futures and options contracts, correctly anticipating the recent strength.
HUI/XAU put in bearish double top cycle highs on Monday 10-15-07 with Thursday 10-11-07's cycle highs, see http://stockcharts.com/charts/gallery.html?%24hui, which is probably the Cyclical Bull Market since late 2000 peaking in dramatic rollover mode versus 5-11-06's cycle highs.
For all practical purposes HUI's Wave 1 Cyclical Bull Market ended on 5-11-06 at 401.69 (XAU at 171.71). HUI/XAU/gold have only risen about 5% from 5-11-06 to the recent cycle highs. Technically HUI/XAU's Wave 1 Cyclical Bull Market is peaking (HUI probably did on 10-11-07, XAU on Monday 10-15-07) in dramatic rollover mode versus 5-11-06's cycle highs at 401.69/171.71 (http://stockcharts.com/charts/gallery.html?%24hui).
Once a sell signal occurs it's time to exit. Actually, I hopefully exit earlier using the Elliott Wave count. The 5% major sell signal, see annotated charts 15 and 18 at http://www.joefrocks.com/GoldStockCharts.html, that occurred in May 2006, correctly indicated that it was time to turn bearish on HUI/XAU.
The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = +0.32% versus the XAU on 10-24, -1.33% on 10-23, +0.91% on 10-22 (yes, same as Friday), +0.91% on 10-19, -0.88% on 10-18, -2.00% on 10-17, +1.11% on 10-16, -0.31% on 10-15, -0.19% on 10-12, +1.62% on 10-11, -1.28% on 10-10, -0.25% on 10-9, -0.06% on 10-8, -0.57% on 10-5, -1.17% on 10-4, +0.37% on 10-3, +1.35% on 10-2, +0.33% on 10-1, -0.41% on 9-28, -2.21% on 9-27, -4.13% on 9-26, +0.40% on 9-25, +2.03% on 9-24, +0.07% 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 -16.23% versus the XAU the past 40 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 has been lagging HUI/XAU as it tends to do. Gold was still rising after HUI/XAU peaked (http://stockcharts.com/charts/gallery.html?%24gold). HUI probably/very likely peaked on 10-11-07 and the XAU probably/very likely peaked on 10-15-07.
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 (basically) 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
9:35 AM
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