SPX (S & P 500) Exceeded The July Cycle High By +0.39% Today
SPX (S & P 500) exceeded the July cycle high by +0.39% today, so, if today's cycle high ends up being a Cyclical Bull Market cycle high or nearly so, for the cycle that began in October 2002, then SPX's (S & P 500) 5% major sell signal, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, will still be a good one. Today's SPX (S & P 500) might end up being a bearish double top with the July cycle high, and, might be the final Cyclical Bull Market cycle high, for the cycle that began in October 2002.
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 Cyclical Bull Market cycle high and that trading SPX long was risky.
Due to today's good economic data and massive Fed credit in recent weeks due to the mortgage/credit crisis, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, the Fed added $28 Billion yesterday/10-4-07, SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) took out the July Cycle high that was a likely Cyclical Bull Market cycle high, for the cycle that began in October 2002.
The WMT Lead Indicator turned bearish again yesterday, at -0.50% versus SPX (S & P 500), was modestly bearish today at -0.14% versus SPX, and, became bearish late in the session, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=,p12,fs,w14&c=wmt,%5EGSPC.
A great sanity check of the Elliott Wave count is the reliable WMT Lead Indicator, which nearly/seemingly always turns bearish ahead of downcycles and bullish ahead of upcycles. For example, the extremely bearish six month WMT Lead Indicator (see 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) jives with SPX soon experiencing a substantial decline/Elliott Wave ABC down up down monthly downcycle, see http://stockcharts.com/charts/gallery.html?%24spx, and a much larger downcycle is likely also, since SPX's (S & P 500) Cyclical Bull Market cycle high might have occurred today at 1561.91.
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 today/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 yesterday, 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 yesterday and today'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 yesterday and today'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 today/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
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 Cyclical Bull Market cycle high and that trading SPX long was risky.
Due to today's good economic data and massive Fed credit in recent weeks due to the mortgage/credit crisis, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, the Fed added $28 Billion yesterday/10-4-07, SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) took out the July Cycle high that was a likely Cyclical Bull Market cycle high, for the cycle that began in October 2002.
The WMT Lead Indicator turned bearish again yesterday, at -0.50% versus SPX (S & P 500), was modestly bearish today at -0.14% versus SPX, and, became bearish late in the session, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=,p12,fs,w14&c=wmt,%5EGSPC.
A great sanity check of the Elliott Wave count is the reliable WMT Lead Indicator, which nearly/seemingly always turns bearish ahead of downcycles and bullish ahead of upcycles. For example, the extremely bearish six month WMT Lead Indicator (see 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) jives with SPX soon experiencing a substantial decline/Elliott Wave ABC down up down monthly downcycle, see http://stockcharts.com/charts/gallery.html?%24spx, and a much larger downcycle is likely also, since SPX's (S & P 500) Cyclical Bull Market cycle high might have occurred today at 1561.91.
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 today/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 yesterday, 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 yesterday and today'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 yesterday and today'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 today/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, SPX, XAU
posted by Joe Ferrazzano at
1:13 PM
