The S & P 500 (SPX) Short Term Wave A Downcycle Probably Bottomed Today
The S & P 500 (SPX) short term Wave A downcycle (since 10-11-07) probably bottomed today, putting in a bullish slightly lower double bottom with Monday's cycle low, see http://stockcharts.com/charts/gallery.html?%24spx. HUI, XAU, RUT probably put in short term Wave A downcycle (since 10-11-07, 10-15-07 for the XAU) cycle lows on Monday, see http://stockcharts.com/charts/gallery.html?%24spx.
The WMT Lead Indicator was a slightly bullish +0.10% versus SPX today/on 10-24. The NEM Lead Indicator was a modestly bullish +0.32% versus the XAU today/on 10-24.
Since Thursday 10-11-07's likely very important Cyclical Bull Market (and minor intermediate term since 8-16-07) cycle high for SPX (S & P 500) (and HUI), SPX has done a short term Wave A downcycle (did Elliott Wave ABC down up down pattern), that probably bottomed today, 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=.
When SPX (S & P 500), HUI, RUT do/complete a short term countertrend Wave B upcycle for few days/weeks I'm probably going to aggressively (large positions) short GDX, the Gold Miners ETF (tracks HUI), and short the Russell 2000 (RUT, http://stockcharts.com/charts/gallery.html?%24rut) via the Ultra Short ETF TWM.
TWM did a big short term Wave 1 upcycle that peaked at 68.69 on Monday 10-22 when RUT's Wave A (probably) bottomed, see http://stockcharts.com/charts/gallery.html?twm. I'll be looking to buy TWM when the short term Wave 2 downcycle bottoms some time in the next few days to a week.
RUT's (Russell 2000) short term countertrend Wave B upcycle should do an Elliott Wave 12345 up down up down up pattern for a few days/weeks. I'll be looking to go short shortly after I think Wave 5 of the short term Wave B has peaked.
Notice that the Russell 2000 (RUT, http://stockcharts.com/charts/gallery.html?%24rut) probably peaked in July at 856.48 versus a countertrend Wave B cycle high at 852.06 on 10-11-07, so, RUT is in a substantial Wave C type decline that should bottom well below the Wave A cycle low at 736.00 on 8-16-07. If RUT bottoms at 700ish then it has about 18% to fall from it's countertrend Wave B cycle high at 852.06 on 10-11-07.
The S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) is up all of 1.30% from July 2007's cycle high at 1555.90 to 10-11-07's likely Cyclical Bull Market cycle high at 1576.09, thanks to massive Fed credit due to the mortgage/credit crisis. Once the market/SPX breaks down nearly sectors will get whacked. SPX actually broke down a few months ago, hitting a 5% major sell signal, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, and, the recent strength was rollover action, which was the upcycle/Cyclical Bull Market since October 2002 running out of gas. What was going on in the market was very important peaking action.
The reliable WMT Lead Indicator is extremely bearish, see the six month chart (shows WMT, SPX, HUI relative performance) at 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.
The point of sell signals is much more to indicate that risk has increased dramatically than it is to be a psychic nailing every cycle high. Double and even triple tops are fairly common, as is rollover action with modestly, and, much less frequently (especially for major 5% sell signals), sometimes substantially higher cycle highs occurring. SPX's (S & P 500) 5% major sell signal, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, indicated that July's cycle high at 1555.90 was a likely/potential Cyclical Bull Market cycle high, and, more importantly, that trading SPX long was risky, because, a very important cycle trendline had broken down.
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 today/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.
A brief rockets summary (none are recommendations, just timing examples/info):
Because a major market downcycle has begun one has to be very careful about trading rockets right now (should be very careful anyway with rockets), if one trades them at all. Generally it's a good idea to trade with the wind/market at your back. Trading long in the midst of a major or even minor downcycle is risky.
Some new rockets I'm watching are TMY (http://tradethecycles.blogspot.com/2007/10/transmeridian-exploration-inc-tmy.html), Titanium Metals Corp (TIE, strong insider buying), VLNC (strong insider buying), PKTR (insider buying), Linux Gold LNXGF (new Cyclical Bull Market).
Spicy Pickle (SPKL.OB, http://stockcharts.com/charts/gallery.html?spkl) needs to do an Elliott Wave ABC down up down monthly downcycle for about a week before I look to trade it long. I'm excited about trading this one. I probably will trade this one once it does a monthly downcycle.
Lincoln Gold, LGCP.OB (http://stockcharts.com/charts/gallery.html?lgcp) looks good once it does an Elliott Wave ABC down up down monthly downcycle for about a week.
I'm "imminently" looking to/might buy VG (Vonage) for a short term Wave 5 upcycle 1 to 2 week trade (trade a Wave 5 short term upcycle of a monthly upcycle).
I'm looking to trade a tiny ICO (http://stockcharts.com/charts/gallery.html?ico) position once it does Elliott Wave ABC down up down monthly downcycle.
And you gold manipulation theorists, I'm still waiting to hear from you! See http://tradethecycles.blogspot.com/2007/10/to-gold-manipulation-theorists.html.
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 WMT Lead Indicator was a slightly bullish +0.10% versus SPX today/on 10-24. The NEM Lead Indicator was a modestly bullish +0.32% versus the XAU today/on 10-24.
Since Thursday 10-11-07's likely very important Cyclical Bull Market (and minor intermediate term since 8-16-07) cycle high for SPX (S & P 500) (and HUI), SPX has done a short term Wave A downcycle (did Elliott Wave ABC down up down pattern), that probably bottomed today, 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=.
When SPX (S & P 500), HUI, RUT do/complete a short term countertrend Wave B upcycle for few days/weeks I'm probably going to aggressively (large positions) short GDX, the Gold Miners ETF (tracks HUI), and short the Russell 2000 (RUT, http://stockcharts.com/charts/gallery.html?%24rut) via the Ultra Short ETF TWM.
TWM did a big short term Wave 1 upcycle that peaked at 68.69 on Monday 10-22 when RUT's Wave A (probably) bottomed, see http://stockcharts.com/charts/gallery.html?twm. I'll be looking to buy TWM when the short term Wave 2 downcycle bottoms some time in the next few days to a week.
RUT's (Russell 2000) short term countertrend Wave B upcycle should do an Elliott Wave 12345 up down up down up pattern for a few days/weeks. I'll be looking to go short shortly after I think Wave 5 of the short term Wave B has peaked.
Notice that the Russell 2000 (RUT, http://stockcharts.com/charts/gallery.html?%24rut) probably peaked in July at 856.48 versus a countertrend Wave B cycle high at 852.06 on 10-11-07, so, RUT is in a substantial Wave C type decline that should bottom well below the Wave A cycle low at 736.00 on 8-16-07. If RUT bottoms at 700ish then it has about 18% to fall from it's countertrend Wave B cycle high at 852.06 on 10-11-07.
The S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) is up all of 1.30% from July 2007's cycle high at 1555.90 to 10-11-07's likely Cyclical Bull Market cycle high at 1576.09, thanks to massive Fed credit due to the mortgage/credit crisis. Once the market/SPX breaks down nearly sectors will get whacked. SPX actually broke down a few months ago, hitting a 5% major sell signal, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, and, the recent strength was rollover action, which was the upcycle/Cyclical Bull Market since October 2002 running out of gas. What was going on in the market was very important peaking action.
The reliable WMT Lead Indicator is extremely bearish, see the six month chart (shows WMT, SPX, HUI relative performance) at 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.
The point of sell signals is much more to indicate that risk has increased dramatically than it is to be a psychic nailing every cycle high. Double and even triple tops are fairly common, as is rollover action with modestly, and, much less frequently (especially for major 5% sell signals), sometimes substantially higher cycle highs occurring. SPX's (S & P 500) 5% major sell signal, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, indicated that July's cycle high at 1555.90 was a likely/potential Cyclical Bull Market cycle high, and, more importantly, that trading SPX long was risky, because, a very important cycle trendline had broken down.
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 today/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.
A brief rockets summary (none are recommendations, just timing examples/info):
Because a major market downcycle has begun one has to be very careful about trading rockets right now (should be very careful anyway with rockets), if one trades them at all. Generally it's a good idea to trade with the wind/market at your back. Trading long in the midst of a major or even minor downcycle is risky.
Some new rockets I'm watching are TMY (http://tradethecycles.blogspot.com/2007/10/transmeridian-exploration-inc-tmy.html), Titanium Metals Corp (TIE, strong insider buying), VLNC (strong insider buying), PKTR (insider buying), Linux Gold LNXGF (new Cyclical Bull Market).
Spicy Pickle (SPKL.OB, http://stockcharts.com/charts/gallery.html?spkl) needs to do an Elliott Wave ABC down up down monthly downcycle for about a week before I look to trade it long. I'm excited about trading this one. I probably will trade this one once it does a monthly downcycle.
Lincoln Gold, LGCP.OB (http://stockcharts.com/charts/gallery.html?lgcp) looks good once it does an Elliott Wave ABC down up down monthly downcycle for about a week.
I'm "imminently" looking to/might buy VG (Vonage) for a short term Wave 5 upcycle 1 to 2 week trade (trade a Wave 5 short term upcycle of a monthly upcycle).
I'm looking to trade a tiny ICO (http://stockcharts.com/charts/gallery.html?ico) position once it does Elliott Wave ABC down up down monthly downcycle.
And you gold manipulation theorists, I'm still waiting to hear from you! See http://tradethecycles.blogspot.com/2007/10/to-gold-manipulation-theorists.html.
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
1:32 PM
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