...........Major warning - Gold To Get Annihilated
The fact that gold only rose +3.46% from $730.40 on 5-11-06 to $755.70 on 10-1-07 despite an anemic/weak US Dollar is obviously a very bearish sign. HUI has a short term double top and a long term triple top (read on). The XAU has a short term triple top and a long term quadruple top. The savvy gold Commercial Traders are going massively short in recent weeks (read on). The NEM Lead Indicator = an extremely bearish -14.80% versus the XAU the past 27 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.
It's plainly obvious (on steroids) that one should be very cautious regarding the precious metals sector now, yet, nearly all gold writers are bullish. Why??? Something's not right. In my opinion the SEC should warn the always bullish nitwits to stop what is effectively if not intentionally a pumping act. What follows is from a previous post. Moderated comments are on by the way.
To synopsize the precious metals sector outlook: HUI has a short term double top and a long term triple top. The XAU has a short term triple top and a long term quadruple top. HUI and the XAU put in bearish countertrend Wave B double top cycle highs on 9-21-07 at 402.27/173.17 (of the Wave 2 Cyclical Bear Market since 5-11-06, see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui) versus Wave 1 Cyclical Bull Market cycle highs on 5-11-06 at 401.69/171.71, and, 10-1-07's cycle highs at 401.50 and 173.09 form a bearish short term double top and a bearish long term triple top, and, the XAU's cycle high on 10-5 at 172.91 is a long term quadruple top and a short term triple top. This jives with the extremely bearish NEM Lead Indicator and the extremely bearish COT (Commitments Of Traders) data (read on). A major gold massacre has probably begun.
The Elliott Wave count and the bearish long term triple top on 5-11-06/9-21-07/10-1-07 strongly suggest that HUI, XAU (today 10-5's cycle high at 172.91 is a long term quadruple top and a short term triple top), and gold entered the final Wave C downcycle (of the Wave 2 Cyclical Bear Market since 5-11-06) on 9-21-07.
Right now the Trade the Cycles picture for HUI, XAU, and gold is very clear, and, I'm looking to short the gold miners ETF GDX, http://stockcharts.com/charts/gallery.html?gdx. 10-2-07's mini crash was a 2%+ sell signal that confirms that the huge spike move that began on 8-16-07 (Wave 5 of Wave B of the Cyclical Bear Market since 5-11-06) peaked on 9-21-07 (cycle highs at 402.27 and 173.17).
HUI completed a very large Elliott Wave ABC down up down Wave A type move early on Thursday 10-4, that began late on 10-1-07, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=on&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=. Most of Thursday and Friday's action was a countertrend Wave B type upcycle, with the third/final Wave 5 cycle high (of an Elliott Wave 12345 up down up down up pattern) appearing to peak shortly before session's end, which jives with Thursday and Friday's very bearish NEM Lead Indicator, at -1.17% and -0.57% versus the XAU. I'm going to look to short the gold miners ETF GDX on Monday, http://stockcharts.com/charts/gallery.html?gdx.
The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = -0.57% versus the XAU 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 -14.80% versus the XAU the past 27 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.
The recent gold COT (Commitments Of Traders) Data is very 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, adding a relatively modest 1751 (27,946 two weeks ago) short gold futures and options contracts (added over 17,000 three weeks ago and a massive 53,207 four weeks ago), while liquidating 5492 (2977 the prior week) long gold futures and options contracts.
See Tuesday 9-25's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html, and, see http://tradethecycles.blogspot.com/2007/10/this-is-it.html for additional important precious metals sector analysis.
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
It's plainly obvious (on steroids) that one should be very cautious regarding the precious metals sector now, yet, nearly all gold writers are bullish. Why??? Something's not right. In my opinion the SEC should warn the always bullish nitwits to stop what is effectively if not intentionally a pumping act. What follows is from a previous post. Moderated comments are on by the way.
To synopsize the precious metals sector outlook: HUI has a short term double top and a long term triple top. The XAU has a short term triple top and a long term quadruple top. HUI and the XAU put in bearish countertrend Wave B double top cycle highs on 9-21-07 at 402.27/173.17 (of the Wave 2 Cyclical Bear Market since 5-11-06, see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui) versus Wave 1 Cyclical Bull Market cycle highs on 5-11-06 at 401.69/171.71, and, 10-1-07's cycle highs at 401.50 and 173.09 form a bearish short term double top and a bearish long term triple top, and, the XAU's cycle high on 10-5 at 172.91 is a long term quadruple top and a short term triple top. This jives with the extremely bearish NEM Lead Indicator and the extremely bearish COT (Commitments Of Traders) data (read on). A major gold massacre has probably begun.
The Elliott Wave count and the bearish long term triple top on 5-11-06/9-21-07/10-1-07 strongly suggest that HUI, XAU (today 10-5's cycle high at 172.91 is a long term quadruple top and a short term triple top), and gold entered the final Wave C downcycle (of the Wave 2 Cyclical Bear Market since 5-11-06) on 9-21-07.
Right now the Trade the Cycles picture for HUI, XAU, and gold is very clear, and, I'm looking to short the gold miners ETF GDX, http://stockcharts.com/charts/gallery.html?gdx. 10-2-07's mini crash was a 2%+ sell signal that confirms that the huge spike move that began on 8-16-07 (Wave 5 of Wave B of the Cyclical Bear Market since 5-11-06) peaked on 9-21-07 (cycle highs at 402.27 and 173.17).
HUI completed a very large Elliott Wave ABC down up down Wave A type move early on Thursday 10-4, that began late on 10-1-07, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=on&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=. Most of Thursday and Friday's action was a countertrend Wave B type upcycle, with the third/final Wave 5 cycle high (of an Elliott Wave 12345 up down up down up pattern) appearing to peak shortly before session's end, which jives with Thursday and Friday's very bearish NEM Lead Indicator, at -1.17% and -0.57% versus the XAU. I'm going to look to short the gold miners ETF GDX on Monday, http://stockcharts.com/charts/gallery.html?gdx.
The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = -0.57% versus the XAU 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 -14.80% versus the XAU the past 27 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.
The recent gold COT (Commitments Of Traders) Data is very 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, adding a relatively modest 1751 (27,946 two weeks ago) short gold futures and options contracts (added over 17,000 three weeks ago and a massive 53,207 four weeks ago), while liquidating 5492 (2977 the prior week) long gold futures and options contracts.
See Tuesday 9-25's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html, and, see http://tradethecycles.blogspot.com/2007/10/this-is-it.html for additional important precious metals sector analysis.
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, XAU
posted by Joe Ferrazzano at
3:49 PM
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