.................................This Is It!
The precious metals massacre that is. HUI was down about -5% at one point today, see http://stockcharts.com/charts/gallery.html?%24hui. Some of the gold writers recently said "This Is It!," apparently thinking that a major gold breakout had occurred. As discussed in great detail recently, it was obvious to me that a gold massacre was probably close at hand.
Reliable HUI/XAU lead indicator NEM made a bearish gap down from 46.02 today (now an upside gap at 46.02), see http://finance.yahoo.com/q/ta?s=nem&t=5d&l=on&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, so, tomorrow could be another big down day. The XAU made a bearish gap down from 173.06 today (now an upside gap at 173.06) and HUI made a bearish gap down from 390ish today shortly after the open (now an upside gap at 390ish).
Despite an anemic/weak US Dollar from 5-11-06 until 10-1-07 all gold was able to do since it's Wave 1 Cyclical Bull Market cycle high at $730.40 on 5-11-06 was to rise a measly +3.46% to $755.70 on 10-1-07, see chart 2 at http://stockcharts.com/charts/gallery.html?%24gold. Only +3.46% in a little under 17 months time.
If gold really was in a Cyclical Bull Market from 5-11-06 until 10-1-07 it would obviously have risen a lot more than +3.46%. It nearly doubled (doubling is 100% of course) from May 2004 until 5-11-06. Very simple analysis, yet, have you seen a single gold writer mention/realize this?
Also, just basic technical analysis, let alone the high powered "Trade the Cycles" market timing system, indicates that gold not only isn't timely, but is very untimely, because, it's Secular Bull Market very long term (probably 15-20+ years) upcycle trendline since April 2001 is at $475ish right now. HUI's Secular Bull Market very long term (probably 15-20+ years) upcycle trendline is at 200ish right now, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html. The XAU's is at 85ish, see chart 9 at http://www.joefrocks.com/GoldStockCharts.html.
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, yesterday's (10-1-07) cycle highs at 401.50 and 173.09 form a bearish short term double top. This jives with the extremely bearish NEM Lead Indicator and the extremely bearish COT (Commitments Of Traders) data (see next two paragraphs). A major gold massacre has probably begun.
The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = +1.35% versus the XAU today/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 -13.43% versus the XAU the past 24 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 latest gold COT (Commitments Of Traders) Data (5 day period ending 9-25) 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 large 27,946 short gold futures and options contracts (added over 17,000 the prior week and a massive 53,207 the week before that), while liquidating 2977 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 for additional important precious metals sector analysis.
Not surprisingly, massive Fed credit recently (humongous $38 Billion last Thursday for example), see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, led to rollover action due to strong program buying, see http://stockcharts.com/charts/gallery.html?%24spx. Yesterday SPX (S & P 500) took out it's 9-19-07 cycle high at 1538.74 that appeared to be a countertrend Wave B cycle high (cycle began on 8-16-07). SPX's (S & P 500) countertrend Wave B cycle high (cycle began on 8-16-07) may have peaked yesterday or might do so tomorrow.
In the 5 day intraday Yahoo chart, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=on&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, one can see that yesterday SPX ( S & P 500) completed an Elliott Wave 12345 up down up down up spike move that began late on Friday 9-28-07, and, it looks like the final/third Wave 5 spike move of the short term upcycle that began on Tuesday 9-25-07.
The Wave A downcycle for SPX (S & P 500) was the decline from the July cycle high/likely Cyclical Bull Market cycle high at 1555.90 (cycle began in October 2002), see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, to 8-16's cycle low at 1370.60, see http://stockcharts.com/charts/gallery.html?%24spx.
SPX's (S & P 500) July 2007 cycle high at 1555.90 is a likely Cyclical Bull Market cycle high (cycle began October 2002), see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, since a major 5% follow through sell signal occurred.
On Wednesday I'll be looking to day trade UltraShort QQQ ProShares (QID), see chart 1 at http://stockcharts.com/charts/gallery.html?qid.
The WMT Lead Indicator is mostly bearish recently, at +0.93% versus SPX (S & P 500) today/on 10-2, at +0.55% on 10-1, at +0.39% on 9-28, at +0.33% on 9-27, at -0.22% on 9-26, at -1.81% on 9-25, at -0.06% on 9-24, at -0.65% on 9-21, at -0.29% on 9-20, +0.09% on 9-19, -0.33% on 9-18, at +0.51% on 9-17, at +0.58% on 9-14, at -0.02% on 9-13, at -0.55% on 9-12, at +0.23% on 9-11, at -0.15% on 9-10, at +0.82% on 9-7, at +0.30% on 9-6, at -0.81% on 9-5, -1.81% on 9-4, -0.40% on 8-31, -1.55% on 8-30, -0.37% on 8-29, 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, which jives with SPX (http://stockcharts.com/charts/gallery.html?%24spx) soon entering Wave C of the major downcycle since the July cycle high (might have yesterday/10-1-07).
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 entering a big Wave C downcycle (might have yesterday/10-1-07), that should bottom well below the Wave A cycle lows that occurred on 8-16-07 for SPX, see http://stockcharts.com/charts/gallery.html?%24spx.
Note that in the likely Wave A 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.
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 2 at http://www.joefrocks.com/GoldStockCharts.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
Reliable HUI/XAU lead indicator NEM made a bearish gap down from 46.02 today (now an upside gap at 46.02), see http://finance.yahoo.com/q/ta?s=nem&t=5d&l=on&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, so, tomorrow could be another big down day. The XAU made a bearish gap down from 173.06 today (now an upside gap at 173.06) and HUI made a bearish gap down from 390ish today shortly after the open (now an upside gap at 390ish).
Despite an anemic/weak US Dollar from 5-11-06 until 10-1-07 all gold was able to do since it's Wave 1 Cyclical Bull Market cycle high at $730.40 on 5-11-06 was to rise a measly +3.46% to $755.70 on 10-1-07, see chart 2 at http://stockcharts.com/charts/gallery.html?%24gold. Only +3.46% in a little under 17 months time.
If gold really was in a Cyclical Bull Market from 5-11-06 until 10-1-07 it would obviously have risen a lot more than +3.46%. It nearly doubled (doubling is 100% of course) from May 2004 until 5-11-06. Very simple analysis, yet, have you seen a single gold writer mention/realize this?
Also, just basic technical analysis, let alone the high powered "Trade the Cycles" market timing system, indicates that gold not only isn't timely, but is very untimely, because, it's Secular Bull Market very long term (probably 15-20+ years) upcycle trendline since April 2001 is at $475ish right now. HUI's Secular Bull Market very long term (probably 15-20+ years) upcycle trendline is at 200ish right now, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html. The XAU's is at 85ish, see chart 9 at http://www.joefrocks.com/GoldStockCharts.html.
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, yesterday's (10-1-07) cycle highs at 401.50 and 173.09 form a bearish short term double top. This jives with the extremely bearish NEM Lead Indicator and the extremely bearish COT (Commitments Of Traders) data (see next two paragraphs). A major gold massacre has probably begun.
The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = +1.35% versus the XAU today/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 -13.43% versus the XAU the past 24 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 latest gold COT (Commitments Of Traders) Data (5 day period ending 9-25) 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 large 27,946 short gold futures and options contracts (added over 17,000 the prior week and a massive 53,207 the week before that), while liquidating 2977 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 for additional important precious metals sector analysis.
Not surprisingly, massive Fed credit recently (humongous $38 Billion last Thursday for example), see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, led to rollover action due to strong program buying, see http://stockcharts.com/charts/gallery.html?%24spx. Yesterday SPX (S & P 500) took out it's 9-19-07 cycle high at 1538.74 that appeared to be a countertrend Wave B cycle high (cycle began on 8-16-07). SPX's (S & P 500) countertrend Wave B cycle high (cycle began on 8-16-07) may have peaked yesterday or might do so tomorrow.
In the 5 day intraday Yahoo chart, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=on&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, one can see that yesterday SPX ( S & P 500) completed an Elliott Wave 12345 up down up down up spike move that began late on Friday 9-28-07, and, it looks like the final/third Wave 5 spike move of the short term upcycle that began on Tuesday 9-25-07.
The Wave A downcycle for SPX (S & P 500) was the decline from the July cycle high/likely Cyclical Bull Market cycle high at 1555.90 (cycle began in October 2002), see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, to 8-16's cycle low at 1370.60, see http://stockcharts.com/charts/gallery.html?%24spx.
SPX's (S & P 500) July 2007 cycle high at 1555.90 is a likely Cyclical Bull Market cycle high (cycle began October 2002), see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, since a major 5% follow through sell signal occurred.
On Wednesday I'll be looking to day trade UltraShort QQQ ProShares (QID), see chart 1 at http://stockcharts.com/charts/gallery.html?qid.
The WMT Lead Indicator is mostly bearish recently, at +0.93% versus SPX (S & P 500) today/on 10-2, at +0.55% on 10-1, at +0.39% on 9-28, at +0.33% on 9-27, at -0.22% on 9-26, at -1.81% on 9-25, at -0.06% on 9-24, at -0.65% on 9-21, at -0.29% on 9-20, +0.09% on 9-19, -0.33% on 9-18, at +0.51% on 9-17, at +0.58% on 9-14, at -0.02% on 9-13, at -0.55% on 9-12, at +0.23% on 9-11, at -0.15% on 9-10, at +0.82% on 9-7, at +0.30% on 9-6, at -0.81% on 9-5, -1.81% on 9-4, -0.40% on 8-31, -1.55% on 8-30, -0.37% on 8-29, 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, which jives with SPX (http://stockcharts.com/charts/gallery.html?%24spx) soon entering Wave C of the major downcycle since the July cycle high (might have yesterday/10-1-07).
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 entering a big Wave C downcycle (might have yesterday/10-1-07), that should bottom well below the Wave A cycle lows that occurred on 8-16-07 for SPX, see http://stockcharts.com/charts/gallery.html?%24spx.
Note that in the likely Wave A 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.
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 2 at http://www.joefrocks.com/GoldStockCharts.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
1:19 PM
