...............Quick Update - SPX, HUI, XAU

SPX (S & P 500) might have entered a countertrend Wave B monthly or maybe minor intermediate term upcycle today, creating a potential bullish breakaway gap at today's open at 1428.23, see http://stockcharts.com/charts/gallery.html?%24spx.

A strong short term Wave 1 upcycle, with a few higher cycle highs occurring (follow through), will be a monthly cycle buy signal (2%+ follow through should occur after the intermediate term downcycle trendline is broken), but, since it's a countertrend monthly upcycle, the risk involved with trading SPX long is obviously higher. Those looking to trade SPX long should wait for a short term Wave 2 downcycle before buying.

SPX (S & P 500) might try to fill today's downside gap at 1428.23 in the next few days. The countertrend Wave B monthly or minor intermediate term upcycle should bottom below 10-11-07's likely Cyclical Bull Market cycle high at 1576.09.

HUI/XAU are in (probably) Wave 3 of a countertrend short term Wave B upcycle since 11-19-07. They put in likely Wave 1 Cyclical Bull Market and intermediate term (cycle began 8-16-07) cycle highs on 11-7-07, see http://stockcharts.com/charts/gallery.html?%24hui. ....... http://www.JoeFRocks.com/ .

HUI NEM XAU

Looks Like A Bearish Very Long Term Gold Double Top

It looks like a bearish very long term gold double top occurred at $848 in early November 2007 versus $850ish in 1980, see http://stockcharts.com/charts/gallery.html?%24gold. I need to confirm that I'm comparing an apple to an apple.

The early November 2007 cycle high at $848 is the Continuous Contract price and the $850ish cycle high in 1980 might not be, but probably is. I need to confirm that an apple is being compared to an apple. See http://uk.news.yahoo.com/rtrs/20071102/tbs-uk-markets-gold-factbox-7318940.html.

The current HUI/XAU/gold short term countertrend Wave B upcycle is a great opportunity to lighten up on one's holdings in the precious metals sector. Monday's gold COT (Commitments of Traders) data might be interesting.

The savvy non contrarian gold Commercial Traders correctly anticipated the sharp countertrend Wave B upcycle, as can be seen in the 5 day period ending 11-13-07's COT data, see http://www.cftc.gov/dea/options/deacmxsof.htm. Their trading has been outstanding in recent months and has generally been good for years. The savvy non contrarian gold Commercial Traders have gone massively short in recent months.

HUI/XAU are four calendar sessions into a countertrend short term Wave B upcycle (began 11-19-07). They put in likely Wave 1 Cyclical Bull Market and intermediate term (cycle began 8-16-07) cycle highs on 11-7-07, see http://stockcharts.com/charts/gallery.html?%24hui.

....... http://www.JoeFRocks.com/ .

HUI NEM XAU

Quick Update - SPX (S & P 500), HUI, XAU

Concerning SPX (S & P 500), it's in, until proven otherwise (today didn't change anything), the final Wave C of Wave C of the intermediate term downcycle since putting in a likely Cyclical Bull Market cycle high at 1576.09 on 10-11-07 (cycle began in October 2002), see http://stockcharts.com/charts/gallery.html?%24spx. It looks like SPX might have a bit more downside.

HUI/XAU are four calendar sessions into a countertrend short term Wave B upcycle. They put in likely Wave 1 Cyclical Bull Market and intermediate term (cycle began 8-16-07) cycle highs on 11-7-07, see http://stockcharts.com/charts/gallery.html?%24hui.

An addition to the discussion of cycle buy/sell signals in the previous post (see http://tradethecycles.blogspot.com/2007/11/happy-thanksgiving-and-spx-s-p-500-hui.html) is that, once a buy or sell signal occurs, wait for a countertrend downcycle (usually a short term 2-4 day Wave 2) or Wave B upcycle (typically a week or two) to occur before looking to enter a long or short position.

Right now it looks like it'll be at least a few more sessions before I look to short the Gold Miners ETF GDX, which closely tracks HUI. Looking at HUI's 5 day intraday chart, HUI appears to have completed a 3 day Elliott Wave 12345 up down up down up upcycle pattern, see http://finance.yahoo.com/q/bc?t=5d&l=on&z=m&q=c&p=&a=&c=&s=%5Ehui, which is probably Wave 1 of the countertrend short term Wave B upcycle. The NEM Lead indicator was a very bearish -1.05% versus the XAU today/11-23.

Gold might have put in a very bearish double top with the 1980 Secular Bull Market cycle high, I still need to check the numbers, so, keep in mind that even I may be too optimistic about HUI/XAU/gold, partly because of the potential very long term bearish gold double top, but, more so for the mortgage/credit bust/debacle that continues to unfold. GM might be forced into bankruptcy I think I heard and many others obviously. The surprise might be to the downside of 220ish for HUI (see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html), 95ish for the XAU, and, 500ish for gold. Welcome to DEFLATION. ....... http://www.JoeFRocks.com/ .

HUI NEM XAU

Happy Thanksgiving And SPX (S & P 500), HUI, XAU, Gold Analysis

I wish everyone a happy and healthy Thanksgiving.

Concerning SPX (S & P 500), it's in, until proven otherwise, the final Wave C of Wave C of the intermediate term downcycle since putting in a likely Cyclical Bull Market cycle high at 1576.09 on 10-11-07 (cycle began in October 2002), see http://stockcharts.com/charts/gallery.html?%24spx. It looks like SPX might have a bit more downside.

At important turning points it's better to wait for cycle trendlines (downtrend or uptrend lines) to clearly be broken (use buy/sell signals, 2% follow through (after breaking through the cycle trendline) for minor buy/sell signals and 5% for major ones), as opposed to using the Elliott Wave count to try to pick a top or bottom, that is, wait for a strong multi day short term Wave 1 upcycle or whatever it takes to clearly break the cycle's downtrend (or uptrend) line and flash a buy (or sell) signal.

For trading monthly (or short term) upcycles, that typically last about 3-4 weeks, one can use the Elliott Wave count to exit in the third/final short term Wave 5 upcycle, and, usually a bearish large spike occurs on the candlestick chart at or near the monthly cycle high.

Upcycles almost always have Elliott Wave 12345 up down up down up patterns, and, downcycles almost always have Elliott Wave ABC down up down patterns, with Elliott Wave patterns usually occurring within Elliott Wave patterns.

One has to look at a lot of daily and (Yahoo 1 and 5 day) intraday charts to get good at it, and, one has to get a good understanding of the cycles or will be very likely to get the wrong Elliott Wave count. The reason why one rarely sees an article with the correct Elliott Wave count is that very few (practically no one) analysts/writers understand cycles. Even when the correct Elliott Wave count is arrived at it's likely to be mostly luck, since very few understand cycles.

HUI/XAU look like they might still need to do/complete the final Wave C of Wave C of the short term Wave A downcycle since putting in likely Wave 1 Cyclical Bull Market cycle highs on 11-7-07, see http://stockcharts.com/charts/gallery.html?%24hui.

Gold might have put in a very bearish double top with the 1980 Secular Bull Market cycle high, I still need to check the numbers, so, keep in mind that even I may be too optimistic about HUI/XAU/gold, partly because of the potential very long term bearish gold double top, but, more so for the mortgage/credit bust/debacle that continues to unfold. GM might be forced into bankruptcy I think I heard and many others obviously. The surprise might be to the downside of 220ish for HUI, 95ish for the XAU, and, 500ish for gold. Welcome to DEFLATION. May the force be with you. ....... http://www.JoeFRocks.com/ .

HUI NEM XAU

................Thanks For All the Kind Words

Thanks for all the condolences/kind words, mostly via e mail. God bless you and all readers.

Concerning the market, a quick update. Keep in mind that this is based on a very quick look, but, I have confidence in it. SPX (S & P 500) might have put in an important intermediate term cycle low today/11-19-07, see http://stockcharts.com/charts/gallery.html?%24spx, and note the bullish large inverse spike on today's candle (right now, could disappear by session's end). SPX (S & P 500) is probably in a multi year (probably greater than one year at least) Cyclical Bear Market since 10-11-07.

HUI/XAU are/might still be in a big short term Wave A downcycle, and, probably entered a one yearish Wave 2 Cyclical Bear Market on 11-7-07, see http://stockcharts.com/charts/gallery.html?%24xau.

Gold might have put in a very bearish double top with the 1980 Secular Bull Market cycle high, I still need to check the numbers, so, keep in mind that even I may be too optimistic about HUI/XAU/gold, partly because of the potential very long term bearish gold double top, but, more so for the mortgage/credit bust/debacle that continues to unfold. GM might be forced into bankruptcy I think I heard and many others obviously. The surprise might be to the downside of 220ish for HUI, 95ish for the XAU, and, 500ish for gold. Welcome to DEFLATION. May the force be with you.

....... http://www.JoeFRocks.com/ .

HUI NEM XAU

My Mother Passed Away On 11-5-07 And HUI's Elliott Wave Count

My mother passed away on 11-5-07. Hopefully she will rest in peace.

See http://finance.yahoo.com/q/bc?s=%5EHUI&t=3m&l=off&z=m&q=c&c= for HUI's 3 month candlestick chart. On 8-16-07 the final Wave 5 intermediate term upcycle of the long term rollover upcycle since mid June 2006 and the Wave 1 Cyclical Bull Market since late 2000 (October 2000 for HUI) began.

A big Wave 1 of Wave 5 peaked on 9-21-07. A puny Wave 3 peaked in mid October, and, a respectable (big assist from a huge NEM spike due to a favorable earnings report, the weak US Dollar, and very strong oil) third/final Wave 5 peaked on 11-7-07, which means that HUI/XAU are probably now in a one yearish Wave 2 Cyclical Bear Market, with downside targets at the Secular Bull Market trendlines at 220ish and 95ish.

HUI/XAU are probably still in a short term Wave A downcycle since 11-7-07. I'll look to short GDX, the Gold Miners ETF, in the countertrend Wave B upcycle, that should do an Elliott Wave 12345 up down up down up pattern for roughly a week or two.

The commodity bust is a no brainer due to the major economic bust that is very deflationary. The fact that the gold "gurus" didn't realize that very important peaking action was occurring and that it was time to get out speaks volumes about the kind of analysts they really are in most cases.

The near term monetary (M2) inflation (M2 grew by over $100 Billion in August)/massive liquidity helped to spike commodities and stocks. The Fed has been injecting massive liquidity into the banking system to help the mortgage/credit crisis, which was a near term plus for commodities, but, the commodity bust has begun, at least for gold/silver and probably oil.

....... http://www.JoeFRocks.com/ .

HUI NEM XAU

Critical Illness In My Family And SPX (S & P 500), HUI, XAU Bear Market

My mother is being kept alive at the hospital right now, and, might pass away this week, or, she might recover like she did a few years ago. I may not post again for a few weeks or even until next year. If my mother gets well soon or at least hangs in there then I may post again soon.

As discussed previously, SPX (S & P 500) probably entered a multi year Bear Market on 10-11-07, and, HUI/XAU may have today or probably will soon (enter a one yearish Wave 2 Cyclical Bear Market). Please see the previous updates for the analysis/info. I hope that you'll tell your friends about this Blog and my system/work. May God bless you all. Ciao

....... http://www.JoeFRocks.com/ .

Probably Very Important HUI/XAU Peaking Action

Reliable lead indicator NEM peaked very early in the session, then put in a near perfect if not perfect bearish double top cycle high late in the session, see http://finance.yahoo.com/q/ta?s=nem&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. If reliable lead indicator NEM fills today's downside gap at 52.34 in the next day or two then the HUI/XAU party/Wave 5 Intermediate Term Upcycle since 8-16-07 will probably turn down in a big way.

Must read http://tradethecycles.blogspot.com/2007/11/huixaus-wave-1-cyclical-bull-market.html, which addresses the long term rollover upcycle since mid June 2006. The HUI/XAU party/Wave 5 Intermediate Term Upcycle since 8-16-07 is probably the third/final Wave 5 of the long term rollover upcycle since mid June 2006. Note how little upside (less than 1% in 10 months, and, peaked at 372.20 in Wave 3 in July 2007, well below the 5-11-06 cycle high at 401.69) occurred from Wave 1's cycle high to Wave 3's cycle high.

The HUI/XAU party/Wave 5 Intermediate Term Upcycle since 8-16-07 (http://stockcharts.com/charts/gallery.html?%24hui) is probably the third/final Wave 5 Intermediate Term Upcycle of the Wave 1 Cyclical Bull Market since late 2000. If so then HUI is probably headed for 220ish in the next year and the XAU is probably headed for 95ish in the next year.

The Wave 1 Cyclical Bull Market since late 2000 ended on 5-11-06 for all practical purposes, since there was no way to know that dramatic rollover action would occur 17 to 18 months later. There's too much risk to be long during rollover cycles, partly because there's no way of knowing that they'll even occur.

Trade the Cycles hit a major 5% sell signal in May 2006, see charts 15 and 18 at http://www.joefrocks.com/GoldStockCharts.html, correctly indicating that HUI/XAU had entered a long 16 month bearish phase, and, should soon enter a Wave 2 Cyclical Bear Market, which is Wave 2 down of the likely 15-20+ year Secular Bull Market since late 2000.

If it wasn't for reliable lead indicator NEM's (http://finance.yahoo.com/q/ta?s=nem&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=) huge spike move due to last week's favorable earnings report HUI/XAU would probably already have fallen -10% to -15% or much more if NEM had disappointed.

The HUI/XAU party/rollover Wave 5 intermediate term upcycle since 8-16-07 might soon be over, but, a 2% follow through sell signal must occur before Trade the Cycles indicates that an intermediate term cycle high has probably occurred. One can wait for a sell signal/cycle trendline breakdown or one can use the Elliott Wave count to try to pick a top.

The longer the timeframe the more sense it makes to use trendline buy/sell signals, and, the shorter the timeframe the more sense using the Elliott Wave count makes. Looking for large bearish spikes at cycle highs and large bullish inverse spikes at cycle lows helps a lot also (on candlestick charts).

The NEM Lead Indicator was a bullish +0.61% versus the XAU today, was a very bullish +2.00% versus the XAU yesterday, and, has been very bullish recently (+2.00% on 11-5, +0.58% on 11-2, +1.04% on 11-1, +5.51% on 10-31), thanks largely to NEM's huge 10-12%+ spike move after last week's favorable earnings report. The NEM Lead Indicator should turn bearish very soon/probably tomorrow.

The HUI/XAU cycle highs will also probably be the Wave 1 Cyclical Bull Market since late 2000 peaking in dramatic rollover mode versus 5-11-06's cycle highs at 401.69/171.71, see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui. The huge spike move since 8-16-07 jives completely with the typical huge/final Bull Market Wave 5 spike move.

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 traded significantly net short in the five day period ending 10-30-07, but, also traded aggressively long, correctly anticipating the recent strength, and, have gone massively short the past eight weeks, adding 27,027 short gold futures and options contracts last week (covered 5567 two weeks ago, added 19,360 three weeks ago, added 16,788 four weeks ago, added 1751 five weeks ago, added 27,946 six weeks ago, added over 17,000 seven weeks ago, and, added a massive 53,207 eight weeks ago), while adding 15,462 (added 9632 two weeks ago, added 5075 three weeks ago, liquidated 192 four weeks ago, liquidated 5492 five weeks ago, liquidated 2977 six weeks ago) long gold futures and options contracts last week.

Yesterday SPX (S & P 500) entered a very short term countertrend Wave B upcycle of a short term Wave C downcycle since 10-24-07, see http://stockcharts.com/charts/gallery.html?%24spx.

SPX (S & P 500) put in a likely Cyclical Bull Market (began October 2002) and minor intermediate term cycle (began 8-16-07) high at 1576.09 on 10-11-07, see http://stockcharts.com/charts/gallery.html?%24spx, versus a modestly lower cycle high in July at 1555.90. A major 5% follow through sell signal occurred for SPX in July, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html.

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.

I'll probably update the rockets info tomorrow.

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 210-230 for HUI and at 90-95 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 HUI/XAU Party Might Be Over And SPX (S & P 500) Surprised Slightly To The Downside

The HUI/XAU party/rollover action (versus 5-11-06's cycle highs) since 8-16-07 (Wave 5 minor intermediate term upcycle began) might be over, and, SPX (S & P 500) surprised slightly to the downside today versus Friday's cycle low, 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=.

Must read http://tradethecycles.blogspot.com/2007/11/huixaus-wave-1-cyclical-bull-market.html, which addresses the long term rollover upcycle since mid June 2006.

If it wasn't for reliable lead indicator NEM's (http://finance.yahoo.com/q/ta?s=nem&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=) huge spike move due to last week's favorable earnings report HUI/XAU would probably already have fallen -10% to -15% or much more if NEM had disappointed.

HUI put in a slightly higher cycle high today versus Friday's cycle high, see http://stockcharts.com/charts/gallery.html?%24hui, and, the XAU put in a slightly lower near perfect bearish double top cycle high today versus Wednesday 10-31-07's cycle high, see http://stockcharts.com/charts/gallery.html?%24xau, that might be a very short term countertrend Wave B cycle high.

Looking at the 5 day intraday charts for HUI (http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=), XAU (http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=), and reliable lead indicator NEM (http://finance.yahoo.com/q/ta?s=nem&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=), they appear to have peaked at mid session, done a significant/sharp intraday Wave A down type move followed by an intraday countertrend Wave B toward session's end, so, they might plunge/do a Wave C type move and take out today's cycle lows early tomorrow. I'll be looking to short GDX, the Gold Miners ETF, or GLD, the Gold ETF, early tomrrow.

The HUI/XAU party/rollover Wave 5 intermediate term upcycle since 8-16-07 might be over, but, a 2% follow through sell signal must occur before Trade the Cycles indicates that an intermediate term cycle high has probably occurred. One can wait for a sell signal/cycle trendline breakdown or one can use the Elliott Wave count to try to pick a top.

The longer the timeframe the more sense it makes to use trendline buy/sell signals, and, the shorter the timeframe the more sense using the Elliott Wave count makes. Looking for large bearish spikes at cycle highs and large bullish inverse spikes at cycle lows helps a lot also (on candlestick charts).

The NEM Lead Indicator was a very bullish +2.00% versus the XAU today, and, has been very bullish recently (+2.00% on 11-5, +0.58% on 11-2, +1.04% on 11-1, +5.51% on 10-31), thanks largely to NEM's huge 10%+ spike move after last week's favorable earnings report. The NEM Lead Indicator should turn bearish very soon/probably tomorrow.

The HUI/XAU cycle highs will also probably be the Wave 1 Cyclical Bull Market since late 2000 peaking in dramatic rollover mode versus 5-11-06's cycle highs at 401.69/171.71, see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui. The huge spike move since 8-16-07 jives completely with the typical huge/final Bull Market Wave 5 spike move.

The Wave 1 Cyclical Bull Market since late 2000 ended on 5-11-06 for all practical purposes, since there was no way to know that dramatic rollover action would occur 17 to 18 months later. There's too much risk to be long during rollover cycles, partly because there's no way of knowing that they'll even occur.

Trade the Cycles hit a major 5% sell signal in May 2006, see charts 15 and 18 at http://www.joefrocks.com/GoldStockCharts.html, correctly indicating that HUI/XAU had entered a long 16 month bearish phase, and, should soon enter a Wave 2 Cyclical Bear Market (might have already).

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 traded significantly net short in the five day period ending 10-30-07, but, also traded aggressively long, correctly anticipating the recent strength, and, have gone massively short the past eight weeks, adding 27,027 short gold futures and options contracts last week (covered 5567 two weeks ago, added 19,360 three weeks ago, added 16,788 four weeks ago, added 1751 five weeks ago, added 27,946 six weeks ago, added over 17,000 seven weeks ago, and, added a massive 53,207 eight weeks ago), while adding 15,462 (added 9632 two weeks ago, added 5075 three weeks ago, liquidated 192 four weeks ago, liquidated 5492 five weeks ago, liquidated 2977 six weeks ago) long gold futures and options contracts last week.

SPX (S & P 500) might have entered a very short term countertrend Wave B upcycle today of a short term Wave C downcycle since 10-24-07, see http://stockcharts.com/charts/gallery.html?%24spx.

SPX (S & P 500) put in a likely Cyclical Bull Market (began October 2002) and minor intermediate term cycle (began 8-16-07) high at 1576.09 on 10-11-07, see http://stockcharts.com/charts/gallery.html?%24spx, versus a modestly lower cycle high in July at 1555.90. A major 5% follow through sell signal occurred for SPX in July, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html.

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.

I'll probably update the rockets info tomorrow.

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 210-230 for HUI and at 90-95 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

"Professionals Focus On Risk, Amateurs Focus On Reward"

"Professionals focus on risk, amateurs focus on reward." I don't know who this quote is attributed to, but, it's so true.

From reading 90%+ of the gold/silver writers on the free sites it's very obvious what category most gold/silver writers fall into. Most are not only amateurs, but rank amateurs. They tend to focus heavily on reward and little if at all on risk. TERRIBLE advice given how volatile the precious metals sector is.

The number one rule of trading and investing is to STAY IN THE GAME (focus on risk), especially if you're trading or investing in very volatile stocks/commodities.

The precious metals sector is very volatile, ESPECIALLY on the downside. When the huge HUI/XAU/gold spike move since 8-16-07 turns down (must read http://tradethecycles.blogspot.com/2007/11/huixaus-wave-1-cyclical-bull-market.html), it'll probably do so with a vengeance. Gold will probably have -$20 to -$30 down days and HUI/XAU will probably have -5%+ down days. Some small cap precious metals stocks will have -10%+ and maybe even -20%+ down days. This might happen next week.

Last week NEM's good earnings report, which led to a huge +10%ish move in NEM and a very sharp rebound in HUI/XAU after it looked like they had entered a correction, plus the Fed's humongous $41 Billion credit injection on punch spiking Thursday, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, kept the HUI/XAU/gold party going, but, this week there's a good chance that severe weakness will set in.

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 210-230 for HUI and at 90-95 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

HUI/XAU's Wave 1 Cyclical Bull Market Since Late 2000 Is Peaking In Dramatic Rollover Mode

HUI/XAU's Wave 1 Cyclical Bull Market since late 2000 is peaking in dramatic rollover mode versus 5-11-06's cycle highs at 401.69/171.71, see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui. The anemic (under water until Wave 5) long term upcycle from June 2006 to now is a likely rollover major upcycle.

Here's the Elliott Wave count for this rollover major upcycle since the cycle low at 270.54 in June 2006, see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui. The Wave 1 cycle high was at 369.38 in September 2006. The Wave 2 cycle low was at 274.72 in October 2006. The Wave 3 cycle high was at 372.20 in July 2007. The Wave 4 cycle low was at 284.85 on 8-16-07. The Wave 5 upcycle of this rollover major upcycle since the cycle low at 270.54 in June 2006 is peaking now (Wave 5 of Wave 5), which means that HUI/XAU's Wave 1 Cyclical Bull Market since late 2000 is peaking in dramatic rollover mode versus 5-11-06's cycle highs at 401.69/171.71.

Note how incredibly anemic this major upcycle since mid June 2006 has been, with all of the upside versus the 5-11-06's cycle highs occurring in October/November 2007. It's clearly not healthy/normal bull market behavior, and, clearly jives with the Wave 1 Cyclical Bull Market since late 2000 peaking in dramatic rollover mode versus 5-11-06's cycle highs at 401.69/171.71, see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui. Also, the huge spike move since 8-16-07 jives completely with the typical huge/final Bull Market Wave 5 spike move.

The trading of the savvy non contrarian gold Commercial Traders jives completely with the HUI/XAU Wave 1 Cyclical Bull Market since late 2000 peaking in dramatic rollover mode scenario, and, one has to be very impressed with their very high level of conviction in the most recent 5 day period's (ending 10-30-07) data, see the last/third data at http://www.cftc.gov/dea/options/deacmxsof.htm.

Amazingly, despite gold's significant strength recently, they not only didn't cover but, continued to go massively short, adding 27,027 short gold futures and options contracts, while also trading aggressively long, adding 15,462 long gold futures and options contracts. These guys are unbelievable. This data obviously strongly supports the HUI/XAU Wave 1 Cyclical Bull Market since late 2000 peaking in dramatic rollover mode scenario.

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 traded significantly net short in the five day period ending 10-30-07, but, also traded aggressively long, correctly anticipating the recent strength, and, have gone massively short the past eight weeks, adding 27,027 short gold futures and options contracts last week (covered 5567 two weeks ago, added 19,360 three weeks ago, added 16,788 four weeks ago, added 1751 five weeks ago, added 27,946 six weeks ago, added over 17,000 seven weeks ago, and, added a massive 53,207 eight weeks ago), while adding 15,462 (added 9632 two weeks ago, added 5075 three weeks ago, liquidated 192 four weeks ago, liquidated 5492 five weeks ago, liquidated 2977 six weeks ago) long gold futures and options contracts last week.

The extremely bearish NEM Lead Indicator (= an extremely bearish -11.20% versus the XAU the past 47 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) also jives with the HUI/XAU Wave 1 Cyclical Bull Market since late 2000 peaking in dramatic rollover mode scenario:

The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = +0.58% versus the XAU today/on 11-2, +1.04% on 11-1,+5.51% on 10-31, -0.01% on 10-30, -1.46% on 10-29, +0.09% on 10-26, -0.72% on 10-25, +0.32% 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 -11.20% versus the XAU the past 47 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.

Also, basic technical analysis strongly supports the HUI/XAU Wave 1 Cyclical Bull Market since late 2000 peaking in dramatic rollover mode scenario, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. HUI's primary trendline is at 210-230 now and the XAU's is at 90-95, so, they have about 50% to fall or nearly so in the next year or so. The laws of Physics haven't been repealed, ignore the clueless delusional ignorant irresponsible misguided gold nitwits.

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 210-230 for HUI and at 90-95 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

Pediment Exploration Ltd. (CDNX:PEZ.V) Revisited, Why Cycles Are So Important

Let's revisit Pediment Exploration Ltd. (CDNX:PEZ.V - News), see http://stockcharts.com/charts/gallery.html?pez.v and see http://finance.yahoo.com/q/bc?s=PEZ.V&t=2y&l=off&z=m&q=c&c=, and I can show why cycles and Elliott Wave patterns are so important.

PEZ.V is in the process of putting in a third/final Wave 5 cycle high of a major intermediate term upcycle since late 2006, see http://finance.yahoo.com/q/bc?s=PEZ.V&t=2y&l=off&z=m&q=c&c=. The Yahoo chart is more useful for seeing where the primary multi year trendline is, partly because it's linear. PEZ.V's relatively flat primary multi year trendline is at 1.00ish right now.

PEZ.V (huge spike move) is in the process of putting in a third/final Wave 5 cycle high of a major intermediate term upcycle since late 2006 (http://finance.yahoo.com/q/bc?s=PEZ.V&t=2y&l=off&z=m&q=c&c=), that might have peaked today at 3.47 (on good news) in rollover mode versus the cycle high at 3.40 on 10-25-07. If so, most of the good news was already priced into the stock.

If PEZ.V declines by a similar -66% (1.18 to 0.405) that it did in 2006's major intermediate term downcycle, it'll decline to 1.20ish in the next 3-6 months or so from a cycle high today at 3.47, which is near or at it's primary multi year trendline.

Cycles and Elliott Wave patterns (plus gaps) are extremely useful to even the most diehard buy and hold investor, because, while they might not sell PEZ.V based upon an understanding of cycles, they definitely wouldn't be buying, unless they knew that continued near term substantial upside surprise was likely due to additional good news. The problem is, often most of the good news is already priced in, as today's appears to have been.

On a non Yahoo PEZ.V message board everyone is getting excited, and, a goofy letter writer is telling everyone that PEZ.V is a good buy and hold investment (probably is, but, he's saying it's timely NOW, when it's likely to fall -50% to -70% in the next 3-6 months), BUT, if most people on that board knew what was going on cyclewise/Elliott Wave count/technically, they wouldn't dream of buying and most would probably be selling.

The bottom line is that one very rarely (never say never, always stay flexible) should buy huge spike moves, either as an investor or as a trader. All one has to do is to look at a few charts and it's plainly obvious that one shouldn't chase huge spike moves, yet, a lot of people do it time after time and get crushed. Got cycles?

What I said before (http://tradethecycles.blogspot.com/2007/10/trade-cycles-example-pediment.html):

"Pediment Exploration Ltd. (CDNX:PEZ.V - News), see http://stockcharts.com/charts/gallery.html?pez.v, has drawn some buzz, because, it's risen a spectacular +800%ish since late last year. Some folks are basically saying consider buying after a short term correction (what I would call a monthly downcycle or maybe a minor intermediate term downcycle).

Let's take a look at PEZ.V's cycles and Elliott Wave count (Trade the Cycles assessment), see chart two at http://stockcharts.com/charts/gallery.html?pez.v. From May 2006 to November 2006 PEZ.V did a Wave 2 major intermediate term downcycle, from the Wave 1 major intermediate term cycle high at 1.18 in May 2006 to the Wave 2 major intermediate term cycle low at 0.405 in November 2006, with a Wave A cycle low at 0.43 and a countertrend Wave B cycle high at 0.63 along the way. The price points are all labeled.

Since putting in a Wave 2 major intermediate term cycle low at 0.405 in November 2006 PEZ.V has done a Wave 3 Elliott Wave 12345 up down up down up major intermediate term upcycle, with Wave 1 up peaking at 1.10, Wave 2 down bottoming at 0.74, Wave 3 up peaking at 2.15, Wave 4 down bottoming at 1.38, and, with the third/final Wave 5 upcycle probably peaking at 3.40 on Thursday 10-25-07, see chart two at http://stockcharts.com/charts/gallery.html?pez.v. Note the bearish very large spike on Thursday 10-25-07's candle.

So, PEZ.V may (on Thursday 10-25-07) have or soon should enter a Wave 4 major intermediate term downcycle that should last about 3 to 6 months, and, will probably result in a similar 66%ish decline that occurred in the Wave 2 major intermediate term downcycle last year (1.18 to 0.405), which would result in a decline to 1.16ish, a reasonable target for the Wave 4 major intermediate term cycle low.

So, the guys that are saying that they're looking to buy a short term correction are very likely to be barking up the wrong tree, especially given that HUI/XAU/gold are likely to soon enter a Wave 2 Cyclical Bear Market. Got cycles?"

....... http://www.JoeFRocks.com/ .

SPX's (S & P 500) Very Short Term Wave A Downcycle Appears To Have Bottomed Early Today

SPX's (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) very short term Wave A downcycle (of a short term Wave C since late Wednesday) since late Wednesday's short term countertrend Wave B cycle high appears to/might have bottomed early today, 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=.

There's a large bullish inverse spike on today's candle right now (http://stockcharts.com/charts/gallery.html?%24spx, right now, it could disappear by session's end), which simply means in this case, due to the bearish short term Wave C downcycle since late Wednesday, that SPX (S & P 500) is likely to bounce/do a very short term countertrend Wave B type rebound (of a short term Wave C) for a session or two.

The additional SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) downside early today, after yesterday's massacre, makes a clear cut bearish scenario even more clear cut. In the next session or two I'll be looking to short GDX, the Gold Miners ETF, and short RUT (Russell 2000), via TWM, the Ultra Short RUT ETF. The WMT (+0.03% versus SPX on 11-1) and NEM (+1.04% versus the XAU on 11-1) Lead Indicators should both be bearish at the time.

The good monthly employment data today was seen as bearish by the market, because, it obviously lowers the probability that the Fed will continue to lower interest rates.

SPX (S & P 500) entered a countertrend short term Wave B upcycle on 10-24-07 (likely Cyclical Bull Market (began October 2002) and minor intermediate term cycle (began 8-16-07) high at 1576.09 on 10-11-07), see http://stockcharts.com/charts/gallery.html?%24spx, and, Wave B obviously peaked on Wednesday, which means that SPX (S & P 500) is in a short term Wave C downcycle.

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

SPX (S & P 500) Has Obviously Probably Entered A Short Term Wave C Downcycle

SPX (S & P 500) entered a countertrend short term Wave B upcycle on 10-24-07 (likely Cyclical Bull Market (began October 2002) and minor intermediate term cycle (began 8-16-07) high at 1576.09 on 10-11-07), see http://stockcharts.com/charts/gallery.html?%24spx, and, Wave B obviously probably peaked yesterday, which means that SPX (S & P 500) is in a short term Wave C downcycle.

SPX (S & P 500) failed to do the usual Elliott Wave 12345 up down up down up pattern on the daily chart from 10-24 to 10-31, but, did so if one includes the near perfect double bottom on 10-22-07 (http://stockcharts.com/charts/gallery.html?%24spx). The point is that it's bearish that SPX was unable to do the usual Elliott Wave 12345 up down up down up pattern in the short term Wave B from 10-24 to 10-31-07.

Today 's SPX (S & P 500) decline was obviously a big Wave A type decline, and, a countertrend Wave B type rebound is likely tomorrow, which jives with the Elliott Wave count on the intraday 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. On the intraday chart SPX did a brief Wave A type move down from late yesterday until early today, did an anemic Wave B type rebound that peaked at mid session and failed to do the usual Elliott Wave 12345 up down up down up pattern, then did a Wave C type plunge late in the session, so, tomorrow should bring a significant rebound in SPX and many indexes like HUI, XAU, RUT.

Tomorrow I'm going to be looking to short GDX, the Gold Miners ETF, and short RUT (Russell 2000), via TWM. The WMT (+0.03% versus SPX on 11-1) and NEM (+1.04% versus the XAU on 11-1) Lead Indicators should both be bearish tomorrow.

Upside gaps created at today's open to watch (just in case, all are probably bearish breakaway gaps) tomorrow are 1549.38 for SPX (S & P 500), which is obviously probably a bearish breakaway gap, 828.02 for RUT, 50.90 for NEM, 45.21 for WMT, 188.10 for the XAU, 78.12 for GLD, and 50.60 for GDX, all being likely bearish breakaway gaps.

The not seasonally adjusted M2 money supply declined a substantial -$38 Billion in the 5 day period ending 10-22-07, from $7390.80 Billion in the 5 day period ending 10-15-07 to $7352.80 Billion in the 5 day period ending 10-22-07, see table two (not seasonally adjusted data on the right) at http://www.federalreserve.gov/releases/h6/Current/. Note that the M2 money supply also declined -$3.20 Billion in the 5 day period ending 10-15-07, and, is below where it was on 9-3-07, which is a major negative for the stock market.

I'm looking at a bunch of rockets right now (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.

Spicy Pickle (SPKL.OB, http://stockcharts.com/charts/gallery.html?spkl) might have completed an Elliott Wave ABC down up down monthly downcycle, but, I'm waiting for a monthly cycle buy signal/strong multi day short term Wave 1 upcycle to occur, then I'll look to buy shortly after I think a short term Wave 2 downcycle has bottomed (a bullish large inverse spike would be a good sign).

Here are my quick notes from today, on some rockets I might soon trade (do your own Elliott Wave count, due diligence, etc, none are recommendations):

TIE (short term Wave (4 of) 3, upside gap at 35.20, http://stockcharts.com/charts/gallery.html?tie).

ICO short term Wave 2 or early Wave 3 (http://stockcharts.com/charts/gallery.html?ico, needs to fill upside gap at 5.38 and weak technical indicators/sell signal, insider buying).

TMY (http://stockcharts.com/charts/gallery.html?tmy, short term Wave 1).

SUF is in Wave C (http://stockcharts.com/charts/gallery.html?suf, needs to fill upside gap at 6.38 and weak technical indicators/sell signal, wait for short term Wave 1).

VG (http://stockcharts.com/charts/gallery.html?vg, short term Wave 5).

PKTR (http://stockcharts.com/charts/gallery.html?pktr, short term Wave 5, weak technical indicators/sell signal).

WWAT (http://stockcharts.com/charts/gallery.html?wwat, Wave 4 of short term 3).

HUI's (http://stockcharts.com/charts/gallery.html?%24hui) final/third short term Wave 5 (began 10-22-07) of the minor intermediate term upcycle since 8-16-07 might have peaked yesterday. HUI, XAU, and gold are likely to soon return to the Cyclical Bear Market that existed from 5-11-06 to September 2007. The major spike move since 8-16-07 is/was a liquidity/weak USD spike move due to the credit/mortgage crisis.

Sometimes/occasionally cycles will put in a huge spike (in dramatic rollover mode) long after it looks like they've peaked. That's what's probably happening now, and, it jives with the extremely bearish gold COT (Commitments of Traders) data, the extremely bearish NEM Lead Indicator, SPX (S & P 500) peaking etc etc etc. When everything jives, especially in such a big way, one has to go with what's indicated.

The more important the cycle the longer it takes to peak, and, the more deceptive the Elliott Wave count tends to be, because of Elliott Wave patterns tending to occur within Elliott Wave patterns, but, the situation is very clear cut for SPX (S & P 500), HUI, XAU, gold, etc when the cycles, Elliott Wave count, indicators, etc are considered in concert.

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 traded significantly net long in the five day period ending 10-23-07, correctly anticipating the recent strength, after having gone massively short the prior six weeks, covering 5567 short gold futures and options contracts (adding 19,360 two weeks ago, added 16,788 three weeks ago, added 1751 four weeks ago, added 27,946 five weeks ago, added over 17,000 six weeks ago, and, added a massive 53,207 seven weeks ago), while adding 9632 (added 5075 two weeks ago, liquidated 192 three weeks ago, liquidated 5492 four weeks ago, liquidated 2977 five weeks ago) long gold futures and options contracts.

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 8-10% from 5-11-06 to the recent cycle highs, with all the upside occurring in October 2007 due to the massive liquidity injection by the Fed and the weak USD (partly due to the Fed Funds rate cut). Technically HUI/XAU's Wave 1 Cyclical Bull Market is peaking 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 = +1.04% versus the XAU today/on 11-1,+5.51% on 10-31, -0.01% on 10-30, -1.46% on 10-29, +0.09% on 10-26, -0.72% on 10-25, +0.32% 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 -11.78% versus the XAU the past 46 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.

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.

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