HUI's Elliott Wave Count Confirms A Likely Countertrend Wave B Cycle High

HUI's Elliott Wave count confirms that a likely countertrend Wave B bearish double top cycle high occurred at 402.27 on 9-21-07 versus the Wave 1 Cyclical Bull Market cycle high at 401.69 on 5-11-06. The second StockCharts HUI gallery chart labels all important cycle highs/lows, see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui.

HUI's Wave 1 Cyclical Bull Market cycle high occurred at 401.69 on 5-11-06. HUI's Wave A cycle low (of the Wave 2 Cyclical Bear Market) occurred at 270.54 in June 2006, the Wave 1 cycle high of the countertrend Wave B occurred at 369.38 in September 2006, the Wave 2 cycle low of Wave B occurred at 274.72 in October 2006, the Wave 3 cycle high of Wave B occurred at 372.20 in July 2007, the Wave 4 cycle low of Wave B occurred at 284.85 in August 2007, the third/probably final Wave 5 cycle high of Wave B occurred at 402.27 on September 21, 2007.

So, HUI (and the XAU of course) probably entered the final Wave C downcycle (of it's Wave 2 Cyclical Bear Market since 5-11-06) on 9-21-07, and, should decline to it's Secular Bull Market (since October 2000) uptrend line at 220ish (maybe a bit lower) in the next 6-12+ months, see chart 9 at http://www.joefrocks.com/GoldStockCharts.html to see HUI's primary Secular Bull Market uptrend line.

Primary trendlines are basic technical analysis, yet, one would be very hard pressed to find a single gold writer on the freely available sites who TRULY uses them (uses them effectively and discusses them with price targets). The only time that a sector, index, stock, etc. is timely from an investor's long term point of view is near it's primary trendline. Basic stuff.

HUI and the XAU probably 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. 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 is probably brewing.

The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = -0.41% versus the XAU 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% versus the XAU 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 -15.11% versus the XAU the past 22 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 (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.

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), HUI, XAU, And Gold Appear To Have Completed Countertrend Wave B Type Upcycles Today

SPX (S & P 500), HUI, XAU, and gold appear to have completed very short term countertrend Wave B type upcycles today, testing recent important cycle highs:

At 1538.74 on 9-19-07 versus 1533.74 today (SPX, http://stockcharts.com/charts/gallery.html?%24spx, countertrend Wave B upcycle began on 8-16-07. A likely Cyclical Bull Market cycle high occurred at 1555.90 in July 2007, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html).

At 402.27 on 9-21-07 versus 399.01 today (HUI, http://stockcharts.com/charts/gallery.html?%24hui, likely bearish countertrend Wave B double top cycle high at 402.27 on 9-21-07 of the Wave 2 Cyclical Bear Market since 5-11-06, 401.69 Wave 1 Cyclical Bull Market cycle high on 5-11-06).

At 173.17 on 9-21-07 versus 171.32 today (XAU, http://stockcharts.com/charts/gallery.html?%24xau, likely bearish countertrend Wave B double top cycle high on 9-21-07 at 173.17 of the Wave 2 Cyclical Bear Market since 5-11-06, 171.71 Wave 1 Cyclical Bull Market cycle high on 5-11-06).

At $747.10 (gold, http://stockcharts.com/charts/gallery.html?%24gold) on 9-21-07 versus $745ish today.

Looking at the 5 day intraday Yahoo charts SPX (S & P 500), HUI, XAU, GLD (gold ETF) all appear to have put in very short term countertrend Wave B type cycle highs today (link below should have all four charts), and, appear to have clearly entered a very short term Wave C downcycle today, showing significant weakness, see http://finance.yahoo.com/q/ta?s=%5Espx%2C+%5Ehui%2C+%5Exau%2C+gld&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c= for all four 5 day intraday Yahoo charts.

So, very important peaking action has occurred recently. SPX (S & P 500) put in a likely Cyclical Bull Market cycle high at 1555.90 in July 2007, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html. NDX (NASDAQ 100) may have put in a Cyclical Bull Market cycle high today, see new chart 1 at http://www.joefrocks.com/GoldStockCharts.html and see http://stockcharts.com/charts/gallery.html?%24ndx.

HUI and the XAU probably 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. 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 is probably brewing.

The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = -0.41% versus the XAU today/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% versus the XAU 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 -15.11% versus the XAU the past 22 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 (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's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html for additional important precious metals sector analysis.

What follows is previously posted analysis/info, except for today's WMT Lead Indicator data.

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.

The countertrend Wave B upcycle for SPX (S & P 500) was the upcycle from 8-16-07 that probably peaked on 9-19-07 at 1538.74 (note the bearish large spike on 9-19's candle), see http://stockcharts.com/charts/gallery.html?%24spx.

Massive Fed credit recently has been a big factor propping the market up/holding it together, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE. The Fed wants their half point (0.50%) Fed Funds rate cut on 9-18 to look like a success. SPX only rallied 3-4 hours after the rate cut, largely because it's Cyclical Bull Market probably peaked in July at 1555.90, AND, it was near the end of a countertrend Wave B upcycle, that had been in effect for slightly over a month (began 8-16-07) when the rate cut occurred on 9-18-07.

On Monday 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 bearish recently, at +0.39% versus SPX (S & P 500) today/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 (probably did on 9-19).

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 (probably did on 9-19), 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

.........NDX's (NASDAQ 100) Big Picture Chart With The Elliott Wave Count

NDX's (NASDAQ 100, http://stockcharts.com/charts/gallery.html?%24ndx) Cyclical Bull Market since October 2002 is in the third/final Wave 5 upcycle, see new (done tonight) chart 1 at http://www.joefrocks.com/GoldStockCharts.html, so, a cycle high appears imminent. NDX's (NASDAQ 100) parabolic/steep rate of ascent the past year is a sign that it's in the third/final Wave 5 spike move of the Cyclical Bull Market since October 2002.

Also, Wave 5 of Wave 5 has been in effect since 8-16-07, and, a cycle high appears imminent, since NDX (NASDAQ 100) has an Elliott Wave 12345 up down up down up pattern since 8-16-07, see http://stockcharts.com/charts/gallery.html?%24ndx. So, an NDX Cyclical Bull Market (since October 2002) cycle high truly appears imminent.

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.

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

New-Homes Sales Drop 8.3 Percent in August From July, Lowest Level in 7 Years

"New-Homes Sales Drop 8.3 Percent in August From July, Lowest Level in 7 Years." This is very negative for gold, which thrives in inflationary economic cycles, not deflationary ones. See full article at http://biz.yahoo.com/ap/070927/economy.html?.v=51. Beware of slimy weak minded gold pimps.

"New-homes sales tumbled in August to the lowest level in seven years, a stark sign that the credit crunch is aggravating an already painful housing slump.

Sales of new homes dropped 8.3 percent in August from July, the Commerce Department reported Thursday, driving down sales to a seasonally adjusted annual rate of 795,000. That was the lowest level since June 2000.

This is just hideous," said Ian Shepherdson, chief economist at High Frequency Economics.

The home sales report came on the same day that the government reported a relatively brisk business growth rate in revised figures for the second quarter. But the 3.8 percent pace was less than previously estimated and it occurred before the credit crisis and its repercussions across the broad spectrum of the economy had taken hold.

Home prices tanked. The median sales price in August fell by 7.5 percent from a year earlier to $225,700. That was the biggest drop in percentage terms in nearly 37 years. The median price is the middle point at which half sell for more and half for less. The average sales price dropped by 8 percent in August from a year earlier to $292,000. That was the biggest decline in 17 years."

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

HUI NEM XAU

SPX (S & P 500) Cycles And Elliott Wave Count

SPX (S & P 500) put in a likely Cyclical Bull Market cycle high at 1555.90 in July 2007 (http://stockcharts.com/charts/gallery.html?%24spx), for the cycle that began in October 2002, because, it's primary trendline broke down, triggering a 5% follow through major sell signal, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html.

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.

The countertrend Wave B upcycle for SPX (S & P 500) was the upcycle from 8-16-07 that probably peaked on 9-19-07 at 1538.74 (note the bearish large spike on 9-19's candle), see http://stockcharts.com/charts/gallery.html?%24spx.

Since Wednesday 9-19-07's likely Wave B cycle high at 1538.74 SPX did a 4 day Wave A downcycle, and, entered a countertrend Wave B type upcycle early on Tuesday 9-25, 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=, that may have peaked late today.

Massive Fed credit recently has been a big factor propping the market up/holding it together, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE. The Fed wants their half point (0.50%) Fed Funds rate cut on 9-18 to look like a success. SPX only rallied 3-4 hours after the rate cut, largely because it's Cyclical Bull Market probably peaked in July at 1555.90, AND, it was near the end of a countertrend Wave B upcycle, that had been in effect for slightly over a month (began 8-16-07) when the rate cut occurred on 9-18-07.

Today the Fed added a massive $38 Billion in credit, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, and, the major averages were only able to rally modestly (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=), which is obviously a bearish sign.

Another bearish sign is that the WMT Lead Indicator was very bullish at greater than +1.00% versus SPX ( S & P 500) early in the session, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, yet SPX only rallied modestly. Most major averages and sector indexes should soon begin to decline substantially.

Given the massive Fed credit recently one can't rule out SPX challenging the likely Wave B cycle high that occurred on 9-19 (http://stockcharts.com/charts/gallery.html?%24spx), but, since the WMT Lead Indicator turned bearish (gap with SPX started to narrow, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC) less than 3 hours into today's session, it appears that 9-19's likely Wave B cycle high will hold.

On Friday 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 bearish recently, at +0.33% versus SPX (S & P 500) today/on 9-27 (turned bearish less than 3 hours into the session), 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 (probably did on 9-19).

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 (probably did on 9-19), 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.

The NEM Lead Indicator is BIG TIME SCARY. The NEM Lead Indicator = -2.21% versus the XAU today/on 9-27, -4.13% on 9-26, +0.40% on 9-25, +2.03% on 9-24, +0.07% versus the XAU 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 -14.70% versus the XAU the past 21 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.

See Tuesday's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html for an important precious metals sector update.

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

An Extremely Bearish NEM Lead Indicator Today And Recently

See today's extremely bearish NEM Lead Indicator (about -2.50% versus the XAU right now) at http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem, and, the extremely bearish 3 month NEM Lead Indicator at http://finance.yahoo.com/q/ta?s=%5EXAU&t=3m&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem that doesn't include today yet. As of yesterday the NEM Lead Indicator was an extremely bearish -12.49% versus the XAU the past 20 sessions. Add the -2.50% right now and it's -14.99%. That's big time scary.

The NEM Lead Indicator is SCARY. The NEM Lead Indicator = -4.13% versus the XAU yesterday/on 9-26, +0.40% on 9-25, +2.03% on 9-24, +0.07% versus the XAU 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 -12.49% versus the XAU the past 20 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.

See Tuesday's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html for an important precious metals sector update.

The Fed added a massive $38 Billion in credit today, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, and the major averages have only been able to rally modestly (http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=), which is obviously a bearish sign.

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) Might Have Completed A Very Short Term Elliott Wave 12345 Up Down Up Down Up Upcycle Late Today

SPX (S & P 500) might have completed a very short term Elliott Wave 12345 up down up down up upcycle late today, that began early yesterday/9-25, 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=. The late spike today looks like it might be the third/final Wave 5 peaking.

Massive Fed credit recently has been responsible for strong program buying that's kept the market together, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE. Tomorrow's punch spiking Thursday that's likely to bring another massive Fed credit injection.

Despite the Fed's massive punch spiking recently ($29 Billion last Thursday 9-20, $15.25 Billion today/9-26) the S & P 500 (SPX) only managed to rally 3-4 hours after the Fed rate cut on 9-18, and, has trended down since early last Wednesday 9-19 (http://stockcharts.com/charts/gallery.html?%24spx).

Wednesday 9-19's early SPX (S & P 500) cycle high (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) is probably a countertrend Wave B cycle high (Wave B upcycle began 8-16-07, see http://stockcharts.com/charts/gallery.html?%24spx.

SPX's (S & P 500) countertrend Wave B (from 8-16 to 9-19) now has an obvious Elliott Wave 12345 up down up down up pattern on the daily charts, and, Wave B appears to have peaked early Wednesday/9-19. The fact that the post rate cut SPX rally lasted only 3 to 4 hours is obviously bearish.

The Wave A downcycle for SPX (S & P 500) was the decline from the July cycle high/likely Cyclical Bull Market cycle high for the cycle that began in October 2002 (see chart 2 at http://www.joefrocks.com/GoldStockCharts.html) to 8-16's cycle low, see http://stockcharts.com/charts/gallery.html?%24spx.

The July SPX (S & P 500) cycle high/likely Cyclical Bull Market cycle high for the cycle that began in October 2002 (see chart 2 at http://www.joefrocks.com/GoldStockCharts.html) held on Wednesday 9-19, see http://stockcharts.com/charts/gallery.html?%24spx.

On Thursday I'll be looking to day trade UltraShort QQQ ProShares (QID), see chart 1 at http://stockcharts.com/charts/gallery.html?qid. It probably makes sense to wait for NDX (NASDAQ 100) to fill today's downside gap at 2076.83 (http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=) before trading QID.

The WMT Lead Indicator is bearish recently, at -0.22% versus SPX (S & P 500) today/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 (probably did on 9-19).

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 (probably did on 9-19), 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.

The NEM Lead Indicator is SCARY. The NEM Lead Indicator = -4.13% versus the XAU today/on 9-26, +0.40% on 9-25, +2.03% on 9-24, +0.07% versus the XAU 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 -12.49% versus the XAU the past 20 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.

See yesterday's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html for an important precious metals sector update.

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

Fed Punch Spiking Continues And Reliable HUI/XAU Lead Indicator NEM Fell Out Of Bed

The Fed continues to desperately spike the punch, injecting a massive $15.25 Billion into the system today (http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE), an average day is about $5 Billion, to try to make their rate cut appear to be a success. It isn't. They don't control economic cycles. They REACT to them.

Despite the Fed's massive punch spiking recently ($29 Billion last Thursday, $15.25 Billion today) the S & P 500 (SPX) only managed to rally 3-4 hours after the Fed rate cut and has trended down since early last Wednesday 9-19 (http://stockcharts.com/charts/gallery.html?%24spx), when a likely countertrend Wave B cycle high occurred for the cycle from 8-16 to 9-19.

The S & P 500 (SPX) probably/very likely entered a Cyclical Bear Market in July 2007, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html, which shows the major 5% follow through sell signal that occurred after SPX's primary trendline broke down.

Reliable HUI/XAU lead indicator NEM literally fell out of bed early today, falling from a session cycle high at 48.25 to a cycle low so far at 45.36, a huge decline of -5.99% that occurred in only about an hour's time, 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=.

Do yourself a big favor and ween yourself off the nitwit gold writers (on the free web sites) that are always bullish. Most are just clueless and some have a bullish agenda because of their newsletter or company. I'm not sure how looking stupid promotes a newsletter or company, but, those guys/girls aren't smart enough to know how bad they look.

XAU Implied Volatility indicated that severe XAU weakness was likely today, because, it fell sharply to 37.935 yesterday/9-25 from 38.700 on 9-24, despite the XAU falling -1.58% yesterday, which was a very sharp (3-6%) rise in complacency that pointed to likely severe weakness today. Normally a significant XAU decline leads to a rise in fear, thus a rise in XAU Implied Volatility.

It's likely that Friday 9-21's early cycle highs at 402.27 for HUI (see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui to see double top at 401.69 on 5-11-06/402.27 on 9-21-07) and at 173.17 for the XAU (versus 171.71 on 5-11-06) are countertrend Wave B bearish double top cycle highs for the Wave 2 Cyclical Bear Market since 5-11-06. The huge spike move from 8-16-07 until 9-21-07 is typical of what happens near very important cycle highs.

See yesterday's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html for an important precious metals sector update.

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

Gold Rose A Paltry +2.29% From 5-11-06's Wave 1 Cyclical Bull Market Cycle High At $730.40 To 9-21-07's Cycle High At $747.10

Despite an anemic US Dollar, gold rose a paltry +2.29% from 5-11-06's Wave 1 Cyclical Bull Market cycle high at $730.40 to 9-21-07's cycle high at $747.10, see chart 2 at http://stockcharts.com/charts/gallery.html?%24gold. +2.29% in over 16 months and some of the garbage spewing gold pimps are talking about how well gold has done.

HUI rose only +0.14% in that time (401.69 on 5-11-06 to 402.27 on 9-21-07) and the XAU rose only +0.85% (171.71 on 5-11-06 to 173.17 on 9-21-07), putting in bearish Wave B double top cycle highs on 9-21-07.

It looks like Friday 9-21's early cycle highs at 402.27 for HUI (see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui to see double top at 401.69 on 5-11-06/402.27 on 9-21-07) and at 173.17 for the XAU (versus 171.71 on 5-11-06) are countertrend Wave B bearish double top cycle highs for the Wave 2 Cyclical Bear Market since 5-11-06. The huge spike move from 8-16-07 until 9-21-07 is typical of what happens near very important cycle highs.

See today's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html for an important precious metals sector update.

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 Lead Indicators WMT And NEM Made Large Bearish Breakaway Gaps At Today's Open

Reliable lead indicators WMT and NEM made large bearish breakaway gaps at today's open, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c= and 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, and, they didn't make a serious attempt at filling them, so, it looks like they and SPX (S & P 500), NDX (NASDAQ 100), HUI, XAU, most averages/sectors, etc will be weak tomorrow.

SPX's (S & P 500) intraday chart is pretty sickly looking, SPX closed slightly underwater, and, looks like it'll be weak tomorrow based on the intraday chart, 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=.

The WMT Lead Indicator was a very bearish -1.81% versus SPX (S & P 500) today, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC.

Wednesday 9-19's early SPX (S & P 500) cycle high (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) is probably a countertrend Wave B cycle high for the cycle that began 8-16-07, see http://stockcharts.com/charts/gallery.html?%24spx.

SPX's (S & P 500) countertrend Wave B (from 8-16 to 9-19) now has an obvious Elliott Wave 12345 up down up down up pattern on the daily charts, and, Wave B appears to have peaked early Wednesday/9-19. The fact that the post rate cut SPX rally lasted only 3 to 4 hours is obviously bearish.

The Wave A downcycle for SPX (S & P 500) was the decline from the July cycle high/likely Cyclical Bull Market cycle high for the cycle that began in October 2002 (see chart 2 at http://www.joefrocks.com/GoldStockCharts.html) to 8-16's cycle low, see http://stockcharts.com/charts/gallery.html?%24spx.

The July SPX (S & P 500) cycle high/likely Cyclical Bull Market cycle high for the cycle that began in October 2002 (see chart 2 at http://www.joefrocks.com/GoldStockCharts.html) held on Wednesday 9-19, see http://stockcharts.com/charts/gallery.html?%24spx.

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 bearish recently, at -1.81% versus SPX (S & P 500) today/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 (probably did on 9-19).

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 (probably did on 9-19), 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.

See today's first post at http://tradethecycles.blogspot.com/2007/09/bearish-huge-transitory-huixau-spike.html for an important precious metals sector update.

The NEM Lead Indicator is SCARY. The NEM Lead Indicator = +0.40% versus the XAU today/on 9-25, +2.03% on 9-24, +0.07% versus the XAU 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 -8.36% versus the XAU the past 19 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.

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

A Bearish Huge Transitory HUI/XAU Spike Occurred Last Thursday

In HUI's 5 day intraday chart, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=, one can see the bearish huge very brief spike (not a healthy rally, very likely important peaking action) that occurred at last Thursday's open, due in large part to the Fed's massive $29 Billion credit infusion early last Thursday, that led to strong program buying, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, that caused HUI/XAU to slightly exceed their 5-11-06 Wave 1 Cyclical Bull Market cycle highs.

It looks like Friday's early cycle highs at 402.27 for HUI (see chart 2 at http://stockcharts.com/charts/gallery.html?%24hui to see double top at 401.69 on 5-11-06/402.27 on 9-21-07) and at 173.17 for the XAU (versus 171.71 on 5-11-06) are countertrend Wave B bearish double top cycle highs for the Wave 2 Cyclical Bear Market since 5-11-06.

The huge spike move from 8-16-07 until 9-21-07 is typical of what happens near very important cycle highs.

While Wave B cycle highs technically should be below the "ultimate" cycle highs, the market isn't an exact science (definitely a science though), indexes' components are changed periodically, and, often cycle highs will occur in dramatic rollover mode, that's very similar to a countertrend Wave B upcycle (basically the same as a Wave B when double tops occur, which is what might have happened Friday 9-21 with HUI/XAU). The point being that, if one was in a basket of HUI or XAU components, the time to sell was in May 2006 not September 2007.

HUI/XAU should head down to their primary multi year Secular Bull Market (since late 2000) trendlines at 220ish and 90ish in the next 6-12+ months, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. Gold should head down to it's primary multi year Secular Bull Market (since April 2001) trendline at $475-500 in the next 6-12+ months.

HUI/XAU/gold's Wave 1 Cyclical Bull Market from late 2000 (April 2001 for gold) until 5-11-06 was largely due to the inflationary real estate/mortgage/credit boom from 2002-2006. I don't see where the next inflationary economic cycle will come from that would drive gold much higher.

The real estate/mortgage/credit bust will last for years. The stock market's (SPX) Cyclical Bull Market that began in October 2002 is toast as of July 2007, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html. Where's the next inflationary economic cycle going to come from? It appears that HUI/XAU/gold's Wave 2 Cyclical Bear Market since 5-11-06 could last longer than expected.

The NEM Lead Indicator is SCARY. The NEM Lead Indicator = +2.03% versus the XAU on 9-24, +0.07% versus the XAU 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 -8.76% versus the XAU the past 18 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.

Fundamentally, the current deflationary real estate/mortgage bust is a major negative for gold, just as the inflationary real estate/mortgage boom from 2002-2006 was a major positive for gold, coinciding with gold's Wave 1 Cyclical Bull Market from April 2001 until May 2006. Gold does well in inflationary economic cycles and gold does poorly in deflationary economic cycles, which is pretty basic stuff that a true gold analyst would understand.

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 Extended Flat NDX/SPX/HUI/XAU Action Probably Points To A Big Decline

The extended flat NDX/SPX/HUI/XAU action in recent sessions probably points to a big decline in most major averages and sector indexes soon, 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, because, the extended flat action probably means that it's a larger downcycle than if the flat action was brief.

Since NDX (NASDAQ 100, http://stockcharts.com/charts/gallery.html?%24ndx) took out last Wednesday's and July's cycle highs, that appeared to be and probably nearly were important cycle highs (if it wasn't for a very brief spike early today), I'm going to revert to using SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) more, even though I'll probably trade NDX short using UltraShort QQQ ProShares (QID), see chart 1 at http://stockcharts.com/charts/gallery.html?qid.

Since SPX (S & P 500) is the proxy for the broad stock market, and, is the key lead index for program trading, that accounts for about 70% of the dollar volume on the NYSE, it makes sense to use it. I started using NDX (NASDAQ 100) only because I am looking to trade it short.

Wednesday 9-19's early SPX (S & P 500) cycle high (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) is probably a countertrend Wave B cycle high for the cycle that began 8-16-07, see http://stockcharts.com/charts/gallery.html?%24spx. SPX's (S & P 500) countertrend Wave B (from 8-16 to 9-19) now has an obvious Elliott Wave 12345 up down up down up pattern on the daily charts, and, Wave B appears to have peaked early Wednesday/9-19.

The Wave A downcycle for SPX (S & P 500) was the decline from the July cycle high/likely Cyclical Bull Market cycle high for the cycle that began in October 2002 (see chart 2 at http://www.joefrocks.com/GoldStockCharts.html) to 8-16's cycle low, see http://stockcharts.com/charts/gallery.html?%24spx.

The July SPX (S & P 500) cycle high/likely Cyclical Bull Market cycle high for the cycle that began in October 2002 (see chart 2 at http://www.joefrocks.com/GoldStockCharts.html) held on Wednesday 9-19, see http://stockcharts.com/charts/gallery.html?%24spx.

On Tuesday I'll be looking to day trade UltraShort QQQ ProShares (QID), see chart 1 at http://stockcharts.com/charts/gallery.html?qid.
-0.06% on 9-24,

The WMT Lead Indicator is mostly bearish recently, at -0.06% versus SPX (S & P 500) today/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 (probably did on 9-19).

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 (probably did on 9-19), 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.

HUI/XAU's countertrend Wave B of the Wave 2 Cyclical Bear Market since 5-11-06 may have peaked early on Friday 9-21 (http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=), with HUI putting in (potentially) a bearish double top at 402.27, only 0.14% above the Wave 1 Cyclical Bull Market cycle high at 401.69 on 5-11-06, see http://stockcharts.com/charts/gallery.html?%24hui, and, with the XAU putting in (potentially) a bearish double top at 173.17, only 0.85% above the Wave 1 Cyclical Bull Market cycle high at 171.71 on 5-11-06, see http://stockcharts.com/charts/gallery.html?%24xau. The huge spike move from 8-16-07 until 9-21-07 is typical of what happens near very important cycle highs.

While Wave B cycle highs technically should be below the "ultimate" cycle highs, the market isn't an exact science (definitely a science though), indexes' components are changed periodically, and, often cycle highs will occur in dramatic rollover mode, that's very similar to a countertrend Wave B upcycle (basically the same as a Wave B when double tops occur, which is what might have happened Friday 9-21 with HUI/XAU). The point being that, if one was in a basket of HUI or XAU components, the time to sell was in May 2006 not September 2007.

HUI/XAU should head down to their primary multi year Secular Bull Market (since late 2000) trendlines at 220ish and 90ish in the next 6-12+ months, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. Gold should head down to it's primary multi year Secular Bull Market (since April 2001) trendline at $475-500 in the next 6-12+ months.

HUI/XAU/gold's Wave 1 Cyclical Bull Market from late 2000 (April 2001 for gold) until 5-11-06 was largely due to the inflationary real estate/mortgage/credit boom from 2002-2006. I don't see where the next inflationary economic cycle will come from that would drive gold much higher.

The real estate/mortgage/credit bust will last for years. The stock market's (SPX) Cyclical Bull Market that began in October 2002 is toast as of July 2007, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html. Where's the next inflationary economic cycle going to come from? It appears that HUI/XAU/gold's Wave 2 Cyclical Bear Market since 5-11-06 could last longer than expected.

The NEM Lead Indicator is SCARY. The NEM Lead Indicator = +2.03% versus the XAU today/on 9-24, +0.07% versus the XAU 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 -8.76% versus the XAU the past 18 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.

Fundamentally, the current deflationary real estate/mortgage bust is a major negative for gold, just as the inflationary real estate/mortgage boom from 2002-2006 was a major positive for gold, coinciding with gold's Wave 1 Cyclical Bull Market from April 2001 until May 2006. Gold does well in inflationary economic cycles and gold does poorly in deflationary economic cycles, which is pretty basic stuff that a true gold analyst would understand.

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

Some Early Thoughts - Quadruple Witching Occurred 9-21, Massive Fed Credit, etc.

Some early thoughts: How big a factor behind recent market strength was Friday 9-21's quarterly "Quadruple Witching" futures/options expiration? Combine Quadruple Witching with massive Fed credit (fuels program traders) in recent weeks due to the mortgage/credit crisis ($29 Billion on Thursday 9-20, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE) and, much of the recent market strength can be explained.

NDX (NASDAQ 100) took out last Wednesday's cycle high (massive Fed credit is fueling program buying), see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, and, the July NDX cycle high was taken out today also, so, NDX's Cyclical Bull Market since October 2002 may peak today or this week as opposed to July.

I didn't do NDX's big picture chart, so, I suspect that NDX (NASDAQ 100) didn't hit a major 5% sell signal yet. SPX ( S & P 500) did hit a major 5% sell signal (see chart 2 at http://www.joefrocks.com/GoldStockCharts.html), so, July's likely SPX Cyclical Bull Market cycle high at 1555.90 should hold, and, it looks like it will. Major 5% sell signals are very reliable.

With massive Fed credit upside surprise/rollover action is likely due to strong program buying ($29 Billion on Thursday 9-20, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE). The Upside surprise/Rollover Barometer is at "Likely." I need to start using the Upside Surprise/Rollover Barometer again.

It looks like HUI/XAU put in important bearish double top countertrend Wave B cycle highs early on Friday 9-21-07 at 402.27/173.17 versus 5-11-06's Wave 1 Cyclical Bull Market cycle highs at 401.69/171.71, see 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=.

HUI/XAU/gold's Wave 1 Cyclical Bull Market from late 2000 (April 2001 for gold) until 5-11-06 was largely due to the inflationary real estate/mortgage/credit boom from 2002-2006. I don't see where the next inflationary economic cycle will come from that would drive gold much higher.

The real estate/mortgage/credit bust will last for years. The stock market's (SPX) Cyclical Bull Market that began in October 2002 is toast as of July 2007, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html. Where's the next inflationary economic cycle going to come from? It appears that HUI/XAU/gold's Wave 2 Cyclical Bear Market since 5-11-06 could last longer than expected.

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

UltraShort QQQ ProShares (QID) Look Good On Monday And A New Annotated NDX (NASDAQ 100) Chart

Check out the new (done today) annotated NDX chart, chart 1 at http://www.joefrocks.com/GoldStockCharts.html. Sometimes a picture is worth more than a thousand words or any number of words.

UltraShort QQQ ProShares (QID, http://stockcharts.com/charts/gallery.html?qid) look good on Monday, since they have a near perfect bullish double bottom at 40.63 in July and 40.64 on 9-19, with a triple bottom on Friday 9-21 at 40.74.

This jives with NDX (NASDAQ 100) probably putting in a Cyclical Bull Market cycle high in July (cycle began October 2002) and a likely countertrend Wave B cycle high on 9-19 slightly below July's cycle high, see the new (done today) annotated NDX chart, chart 1 at http://www.joefrocks.com/GoldStockCharts.html. As annotated on the new daily NDX chart Thursday's decline looks like a Wave A down type move, Friday's rally looks like a Wave B up, so, on Monday a Wave C down type move is likely.

On Friday NDX (NASDAQ 100) was very flat for much of the session, see http://finance.yahoo.com/q/ta?s=%5ENDX&t=1d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=, has a very bearish intraday quintuple top, and, looks like it'll be weak early on Monday, which jives with the Elliott Wave count discussed in the previous paragraph.

If NDX fills (as expected) Tuesday's downside gap at 1983.08 sometime in the next few sessions, see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, that will probably trigger a 2% follow through sell signal (break 2%+ below the support uptrend line), which will confirm that Wednesday 9-19's cycle high was a countertrend Wave B cycle high for the cycle that began 8-16-07, see http://stockcharts.com/charts/gallery.html?%24ndx.

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 (NDX also) 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.

The WMT Lead Indicator is mostly bearish recently, at -0.65% versus SPX (S & P 500) on 9-21, at -0.29% versus 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/NDX (http://stockcharts.com/charts/gallery.html?%24ndx) soon entering Wave C of their major downcycle since the July cycle high (probably did on 9-19).

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 NDX/SPX soon entering a big Wave C downcycle (probably did on 9-19), that should bottom well below the Wave A cycle lows that occurred on 8-16-07 for NDX/SPX, see http://stockcharts.com/charts/gallery.html?%24ndx.

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.

For you gold/silver bugs (I will be again once the Bear Market since 5-11-06 ends) it's very important to see the previous post at http://tradethecycles.blogspot.com/2007/09/gold-traders-who-know-what-theyre-doing.html. Nearly all of the dingbat gold writers are getting giddy near a very important cycle high, that probably occurred yesterday/9-21.

Let's pop the Champagne, HUI is up +0.14% in 16 months (401.69 on 5-11-06 to 402.27 on 9-21-07)! XAU is up +0.85% in 16 months (171.71 on 5-11-06 to 173.17 on 9-21-07)! Wow! If it wasn't for the huge spike from 8-16-07 to 9-21-07 HUI/XAU would still be down/wouldn't have exceeded their 5-11-06 Wave 1 Cyclical Bull Market cycle highs.

There are very few gold writers I can read (that are worth reading), and, even some that I read it's mostly for the amusement or curiosity factor. I've had a lot of laughs since 5-11-06. There are some real oddballs and losers in the gold sector. In some cases they don't realize how obvious it is that they have an agenda and are spewing propaganda, and, how easy it is to see through it. Most people know garbage when they see it and know the real deal when they see it. Many gold writers get arrogant and giddy near important cycle highs. Arrogance and giddiness don't jive with trading and investing.

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 Gold Traders Who Know What They're Doing Are Going Massively Short

The gold traders who know what they're doing, the savvy usually non contrarian gold Commercial Traders, are going massively short. They added a very respectable 17,083 short gold futures and options contracts in the latest report/5 day period ending 9-18-07, and, a massive 52,000+ short gold futures and options contracts in the previous report (possibly the largest weekly change I've ever seen), while also trading long in recent weeks (added 1303 long futures and options contracts in the latest report for the 5 day period ending 9-18-07, and, over 10,000 long futures and options contracts in the previous report), see the last/third data at http://www.cftc.gov/dea/options/deacmxsof.htm.

This jives with HUI/XAU possibly putting in very important countertrend Wave B (of the Wave 2 Cyclical Bear Market since 5-11-06) double top cycle highs early today/Friday 9-21 (http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=), with HUI putting in (potentially) a bearish double top at 402.27, only 0.14% above the Wave 1 Cyclical Bull Market cycle high at 401.69 on 5-11-06, see http://stockcharts.com/charts/gallery.html?%24hui, and, with the XAU putting in (potentially) a bearish double top at 173.17, only 0.85% above the Wave 1 Cyclical Bull Market cycle high at 171.71 on 5-11-06, see http://stockcharts.com/charts/gallery.html?%24xau. The huge spike move since 8-16-07 is typical of what happens near very important cycle highs.

Also, the NEM Lead Indicator is SCARY. The NEM Lead Indicator = +0.07% versus the XAU today/on 9-21, -1.46% versus the XAU on 9-20, +0.69% versus the XAU on 9-19, -2.33% versus the XAU 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 -10.79% versus the XAU the past 17 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.

While Wave B cycle highs technically should be below the "ultimate" cycle highs, the market isn't an exact science (definitely a science though), indexes' components are changed periodically, and, often cycle highs will occur in dramatic rollover mode, that's very similar to a countertrend Wave B upcycle (basically the same as a Wave B when double tops occur, which is what might have happened today with HUI/XAU). The point being that, if one was in a basket of HUI or XAU components, the time to sell was in May 2006 not September 2007.

HUI/XAU should head down to their primary multi year Secular Bull Market (since late 2000) trendlines at 220ish and 90ish in the next 3-6 months, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. Gold should head down to it's primary multi year Secular Bull Market (since April 2001) trendline at $475-500 in the next 3-6 months.

Fundamentally, the current deflationary real estate/mortgage bust is a major negative for gold, just as the inflationary real estate/mortgage boom from 2002-2006 was a major positive for gold, coinciding with gold's Wave 1 Cyclical Bull Market from April 2001 until May 2006. Gold does well in inflationary economic cycles and gold does poorly in deflationary economic cycles, which is pretty basic stuff that a true gold analyst would understand.

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