The Countertrend Wave B Upcycle Of HUI/XAU's First Intermediate Term Downcycle Of The Wave 2 Cyclical Bear Market Appears To Have Peaked
The countertrend Wave B Upcycle (since 12-18-07) of HUI/XAU's first (Wave A) intermediate term downcycle (of the Wave 2 Cyclical Bear Market since 11-7-07) appears to have peaked, see the 5 day intraday HUI chart at http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=on&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c= and the daily HUI chart at http://stockcharts.com/charts/gallery.html?%24hui.
HUI/XAU approaching the 11-7-07 likely Wave 1 Cyclical Bull Market cycle highs makes perfect sense. It's probably the Wave 2 Cyclical Bear Market's (since 11-7-07) downtrend line beginning relatively flat, as cycle trendlines usually do. The huge spike move the past two sessions points to likely severe weakness, because, the larger the spike move the more severe the ensuing decline tends to be.
Reliable lead indicator NEM's very large spike on today's candle is another bearish sign, see http://stockcharts.com/charts/gallery.html?nem. NEM's extreme volume the past two days, at 14.33 million shares today and 11.50ish million shares yesterday is another bearish sign, because, extreme volume (and volatility) tends to occur at important cycle highs/lows. The smart money was probably selling to the dumb money the past two days.
The NEM Lead Indicator turned bearish again today, at -0.56% versus the XAU today/on 1-3, and, it became bearish toward session's end, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem. The NEM Lead Indicator was +0.94% on 1-2, +1.38% on 12-31, -0.90% on 12-28, -1.15% on 12-27, -1.12% on 12-26, -1.10% on 12-24, -1.08% on 12-21, -0.18% on 12-20, -0.26% on 12-19.
The WMT (Walmart) Lead Indicator was a very bearish -1.11% versus the S & P 500 (SPX) today/on 1-3 (see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=m&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC), was +0.11% on 1-2, -0.45% on 12-31, +0.50% on 12-28, +0.17% on 12-27, -0.82% on 12-26, +0.29% on 12-24, -0.92% on 12-21, -0.97% on 12-20, -0.19% on 12-19.
Today was a golden opportunity to exit the gold/silver sector. If you didn't realize that this huge spike move the past two days was important peaking action take a good long hard look in the mirror. This is going to be a very tough year for nearly all gold/silver bugs. Most of last year was difficult. HUI/XAU/gold were underwater versus the 5-11-06 cycle highs until early October 2007.
Big spike moves tend to mark important cycle highs, and, this two day monster spike move was obviously huge. Gold's peaking in rollover mode (today's cycle high was $869ish), lagging HUI/XAU as it tends to do at important cycle highs/lows, versus the 11-7-07 cycle high at $848. The big lag time between gold and HUI/XAU, with gold peaking about two months later, is a clear sign that important peaking action is occurring.
Once HUI/XAU do a very sharp -3%+ very short term 1-2 day Wave A type downcycle I'l look to short GDX, the Gold Miners ETF, in a countertrend Wave B rebound/very short term 1-2 day upcycle, that obviously must peak below the previous cycle high, otherwise it wouldn't be a countertrend Wave B upcycle. I'll also look for the NEM/WMT Lead Indicators to be bearish or at least near neutral/not overly bullish on an intraday basis (intraday chart, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem).
I bought a tiny position in LTXX at 2.9999 yesterday, whose short term Wave 4 downcycle appears to have bottomed yesterday, see http://stockcharts.com/charts/gallery.html?ltxx. Note the bullish large inverse spike on yesterday's candle. LTXX appears to have put in a Cyclical Bear Market cycle low at 2.25 recently.
NDX (NASDAQ 100) is doing/did a very short term Wave A downcycle since 12-26-07, that's the first downcycle of the final Wave C of Wave C of the intermediate term downcycle since late October (http://stockcharts.com/charts/gallery.html?%24ndx), 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. So, I may short NDX (via the Ultra Short NDX ETF QID) during a very short term countertrend Wave B rebound/upcycle in the next session or two.
The beauty of gaps is that, usually/reliably, important cycle highs/lows occur shortly after gap filling action is completed.
NDX's (NASDAQ 100, http://stockcharts.com/charts/gallery.html?%24ndx) Wave A intermediate term cycle low target range of 1820-1840 was very straightforward/easy to derive. NDX's (NASDAQ 100) short term Wave C of Wave C/final intermediate term cycle (Wave A intermediate term downcycle since late October) low target range is 1820-1840 (1980.18 was the Wave A cycle low on 11-12-07, see http://stockcharts.com/charts/gallery.html?%24ndx), shortly after filling the final downside gap at 1846.09.
NDX’s Wave A of Wave C of Wave C should/might bottom at 1940-2020. NDX (NASDAQ 100) has downside gaps at 2111.77 (filled 12-27), 2069.68 (filled 1-2), 2031.00, 1989.36, 1982.16, 1960.20, 1899.24, 1846.09.
I have more work to do for HUI/XAU/NEM/GDX. I'll try to post that in the next day or two. NEM has downside gaps at 48.83, 48.45 (filled 12-27), 47.39, 42.29, 41.52. So, NEM may fill all of those gaps, but I need to look at all (HUI/XAU/NEM/GDX) and derive good target(s). A few weeks ago, with the big day trade I did, I had to use NEM, because, that was the only available downside gap.
Given the Euro gold's long term bearish double top (May 2006/November 2007, see chart 3 at http://www.the-privateer.com/chart/g-multi.html), and, the fact that the US Dollar probably entered a Cyclical Bull Market in November 2007 after being in a Bear Market since late 2005 (think any of the gold writers will point that fact out?), see http://stockcharts.com/charts/gallery.html?%24usd, plus the very bearish NEM/WMT Lead Indicators recently (see NEM Lead Indicator 5 day chart http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem), and it's far too risky to trade gold aggressively or even modestly long now.
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 $490ish right now, so, gold would be a great buy in the $490-520 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 (the long term upcycle from June 2006 to 11-7-07 was an anemic rollover upcycle, in which HUI/XAU were underwater until October 2007 versus the 5-11-06 cycle highs), 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 Wave 2 Cyclical Bear Market will bottom. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
HUI/XAU approaching the 11-7-07 likely Wave 1 Cyclical Bull Market cycle highs makes perfect sense. It's probably the Wave 2 Cyclical Bear Market's (since 11-7-07) downtrend line beginning relatively flat, as cycle trendlines usually do. The huge spike move the past two sessions points to likely severe weakness, because, the larger the spike move the more severe the ensuing decline tends to be.
Reliable lead indicator NEM's very large spike on today's candle is another bearish sign, see http://stockcharts.com/charts/gallery.html?nem. NEM's extreme volume the past two days, at 14.33 million shares today and 11.50ish million shares yesterday is another bearish sign, because, extreme volume (and volatility) tends to occur at important cycle highs/lows. The smart money was probably selling to the dumb money the past two days.
The NEM Lead Indicator turned bearish again today, at -0.56% versus the XAU today/on 1-3, and, it became bearish toward session's end, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem. The NEM Lead Indicator was +0.94% on 1-2, +1.38% on 12-31, -0.90% on 12-28, -1.15% on 12-27, -1.12% on 12-26, -1.10% on 12-24, -1.08% on 12-21, -0.18% on 12-20, -0.26% on 12-19.
The WMT (Walmart) Lead Indicator was a very bearish -1.11% versus the S & P 500 (SPX) today/on 1-3 (see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=m&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC), was +0.11% on 1-2, -0.45% on 12-31, +0.50% on 12-28, +0.17% on 12-27, -0.82% on 12-26, +0.29% on 12-24, -0.92% on 12-21, -0.97% on 12-20, -0.19% on 12-19.
Today was a golden opportunity to exit the gold/silver sector. If you didn't realize that this huge spike move the past two days was important peaking action take a good long hard look in the mirror. This is going to be a very tough year for nearly all gold/silver bugs. Most of last year was difficult. HUI/XAU/gold were underwater versus the 5-11-06 cycle highs until early October 2007.
Big spike moves tend to mark important cycle highs, and, this two day monster spike move was obviously huge. Gold's peaking in rollover mode (today's cycle high was $869ish), lagging HUI/XAU as it tends to do at important cycle highs/lows, versus the 11-7-07 cycle high at $848. The big lag time between gold and HUI/XAU, with gold peaking about two months later, is a clear sign that important peaking action is occurring.
Once HUI/XAU do a very sharp -3%+ very short term 1-2 day Wave A type downcycle I'l look to short GDX, the Gold Miners ETF, in a countertrend Wave B rebound/very short term 1-2 day upcycle, that obviously must peak below the previous cycle high, otherwise it wouldn't be a countertrend Wave B upcycle. I'll also look for the NEM/WMT Lead Indicators to be bearish or at least near neutral/not overly bullish on an intraday basis (intraday chart, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem).
I bought a tiny position in LTXX at 2.9999 yesterday, whose short term Wave 4 downcycle appears to have bottomed yesterday, see http://stockcharts.com/charts/gallery.html?ltxx. Note the bullish large inverse spike on yesterday's candle. LTXX appears to have put in a Cyclical Bear Market cycle low at 2.25 recently.
NDX (NASDAQ 100) is doing/did a very short term Wave A downcycle since 12-26-07, that's the first downcycle of the final Wave C of Wave C of the intermediate term downcycle since late October (http://stockcharts.com/charts/gallery.html?%24ndx), 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. So, I may short NDX (via the Ultra Short NDX ETF QID) during a very short term countertrend Wave B rebound/upcycle in the next session or two.
The beauty of gaps is that, usually/reliably, important cycle highs/lows occur shortly after gap filling action is completed.
NDX's (NASDAQ 100, http://stockcharts.com/charts/gallery.html?%24ndx) Wave A intermediate term cycle low target range of 1820-1840 was very straightforward/easy to derive. NDX's (NASDAQ 100) short term Wave C of Wave C/final intermediate term cycle (Wave A intermediate term downcycle since late October) low target range is 1820-1840 (1980.18 was the Wave A cycle low on 11-12-07, see http://stockcharts.com/charts/gallery.html?%24ndx), shortly after filling the final downside gap at 1846.09.
NDX’s Wave A of Wave C of Wave C should/might bottom at 1940-2020. NDX (NASDAQ 100) has downside gaps at 2111.77 (filled 12-27), 2069.68 (filled 1-2), 2031.00, 1989.36, 1982.16, 1960.20, 1899.24, 1846.09.
I have more work to do for HUI/XAU/NEM/GDX. I'll try to post that in the next day or two. NEM has downside gaps at 48.83, 48.45 (filled 12-27), 47.39, 42.29, 41.52. So, NEM may fill all of those gaps, but I need to look at all (HUI/XAU/NEM/GDX) and derive good target(s). A few weeks ago, with the big day trade I did, I had to use NEM, because, that was the only available downside gap.
Given the Euro gold's long term bearish double top (May 2006/November 2007, see chart 3 at http://www.the-privateer.com/chart/g-multi.html), and, the fact that the US Dollar probably entered a Cyclical Bull Market in November 2007 after being in a Bear Market since late 2005 (think any of the gold writers will point that fact out?), see http://stockcharts.com/charts/gallery.html?%24usd, plus the very bearish NEM/WMT Lead Indicators recently (see NEM Lead Indicator 5 day chart http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem), and it's far too risky to trade gold aggressively or even modestly long now.
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 $490ish right now, so, gold would be a great buy in the $490-520 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 (the long term upcycle from June 2006 to 11-7-07 was an anemic rollover upcycle, in which HUI/XAU were underwater until October 2007 versus the 5-11-06 cycle highs), 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 Wave 2 Cyclical Bear Market will bottom. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
1:15 PM
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