Early Weakness/Downside Gap Filling Action Is Likely Tomorrow 1-15
Early potentially severe weakness/downside gap filling action is likely tomorrow 1-15 for WMT/SPX/RUT/HUI/XAU, see http://finance.yahoo.com/q/ta?s=WMT&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=.
Walmart (WMT) spiked at mid session after hitting a session cycle low, then rolled over, and, based on the very bearish WMT Lead Indicator today, at -1.20% versus the S & P 500 (SPX), potentially severe early weakness is likely tomorrow, in which WMT will probably fill it's downside gap at 46.90 from last Thursday 1-10, and, SPX will probably fill it's downside gap at 1401.02 created at today 1-14's open, and, RUT (Russell 2000) will probably fill a downside gap at 704.65 created at today's open.
It looks like I'll probably go long the Ultra Long Russell 2000 (RUT) ETF UWM tomorrow, shortly after WMT (probably) fills it's downside gap at 46.90. The Russell 2000 (RUT) appears to have put in a major intermediate term cycle low on 1-9-08, see http://stockcharts.com/charts/gallery.html?%24rut. Note the bullish very large inverse spike on 1-9's candle.
SPX (http://stockcharts.com/charts/gallery.html?%24spx), NDX (http://stockcharts.com/charts/gallery.html?%24ndx), WMT (http://stockcharts.com/charts/gallery.html?wmt) probably put in minor intermediate term cycle lows on 1-9-08. Note the bullish large inverse spike on 1-9's candle for SPX, NDX, and WMT.
However, before trading SPX/NDX/RUT aggressively long it makes sense to wait for a strong multi day short term Wave 1 upcycle, that will trigger a 2%+ follow though buy signal (after breaking the intermediate term downcycle trendline). Once a 2%+ follow though buy signal occurs, one looks to go long during a 2-3 day short term Wave 2 downcycle.
Concerning HUI/XAU "Trade the Cycles" correctly turned bearish on 11-7-07, see http://stockcharts.com/charts/gallery.html?%24xau. Today was the first session since 11-7-07 that the XAU made any upside progress.
Gold lags HUI/XAU at important cycle highs/lows, so gold might peak in rollover mode a few months after HUI/XAU, or, might put in a slightly higher bearish double top, as occurred in 2004 (January/April 2004 double top versus HUI Wave 3 long term cycle high on 12-2-03 and the XAU peaked 1-6-04).
HUI/XAU are peaking in rollover mode versus the 11-7-07 cycle highs. A Wave 1 Cyclical Bull Market cycle high (cycle began in late 2000) might have occurred today, see 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=.
I'm looking to short HUI/XAU this week (in a very short term countertrend Wave B upcycle), after the monthly upcycle trendline since 12-18-07 clearly breaks down and does a very short term 2-3 day Wave A (-3%+ decline) downcycle.
The US Dollar probably entered a Cyclical Bull Market in November 2007 after being in a Bear Market since late 2005, see http://stockcharts.com/charts/gallery.html?%24usd, gold stocks have been underperforming gold since 11-7-07, which is a very bearish sign, and, the gold COT data is very bearish from a big picture perspective, etc.
The gold COT (Commitments Of Traders) data remains bearish, see the third/last 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 1-8-08 (traded net short 8529 gold futures and options contracts versus trading net short 16,658 and 12,456 the previous two weeks), trading a significant long position (added 14,077 long gold futures and options contracts versus 5608 and 8002 added the previous two weeks), correctly anticipating short term strength, but, continuing to go massively short (added 22,606 short gold futures and options contracts versus 22,266 and 20,458 added the previous two weeks), as they've done in recent months.
So, the gold COT (Commitments Of Traders) data is short term mixed and long term bearish. Some significant gold strength this week wasn't surprising, but, it's very likely to be a great shorting opportunity.
Gold's action recently is exactly what one would expect near a very important cycle high.
In new annotated chart one at http://www.joefrocks.com/GoldStockCharts.html one can see that gold's Wave 1 Cyclical Bull Market (since April 2001) uptrend line (note that it went parabolic in mid 2005) is at $700ish, and, the primary Secular Bull Market (should last about 20 years, there should be two more Cyclical Bull markets, corresponding to Elliott Waves 3 and 5) uptrend line is at $490ish.
If you think that gold will keep rising in the parabolic fashion it has since mid 2005 for the next 10-15 years I have some very affordable prime real estate in Afghanistan for you, with a great view of all the action.Gold should fall to $700ish or less in the next few months, and, in the next 12-18 months (Wave 2 Cyclical Bear Market) gold should fall to $500-525.
Trust me, ignore the gold nitwits and con artists who don't understand (or are conning people) cycles, basic technical analysis (such as relatively flat primary trendlines), Elliott Wave patterns, the COT (Commitments of Traders) data, etc.
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
Walmart (WMT) spiked at mid session after hitting a session cycle low, then rolled over, and, based on the very bearish WMT Lead Indicator today, at -1.20% versus the S & P 500 (SPX), potentially severe early weakness is likely tomorrow, in which WMT will probably fill it's downside gap at 46.90 from last Thursday 1-10, and, SPX will probably fill it's downside gap at 1401.02 created at today 1-14's open, and, RUT (Russell 2000) will probably fill a downside gap at 704.65 created at today's open.
It looks like I'll probably go long the Ultra Long Russell 2000 (RUT) ETF UWM tomorrow, shortly after WMT (probably) fills it's downside gap at 46.90. The Russell 2000 (RUT) appears to have put in a major intermediate term cycle low on 1-9-08, see http://stockcharts.com/charts/gallery.html?%24rut. Note the bullish very large inverse spike on 1-9's candle.
SPX (http://stockcharts.com/charts/gallery.html?%24spx), NDX (http://stockcharts.com/charts/gallery.html?%24ndx), WMT (http://stockcharts.com/charts/gallery.html?wmt) probably put in minor intermediate term cycle lows on 1-9-08. Note the bullish large inverse spike on 1-9's candle for SPX, NDX, and WMT.
However, before trading SPX/NDX/RUT aggressively long it makes sense to wait for a strong multi day short term Wave 1 upcycle, that will trigger a 2%+ follow though buy signal (after breaking the intermediate term downcycle trendline). Once a 2%+ follow though buy signal occurs, one looks to go long during a 2-3 day short term Wave 2 downcycle.
Concerning HUI/XAU "Trade the Cycles" correctly turned bearish on 11-7-07, see http://stockcharts.com/charts/gallery.html?%24xau. Today was the first session since 11-7-07 that the XAU made any upside progress.
Gold lags HUI/XAU at important cycle highs/lows, so gold might peak in rollover mode a few months after HUI/XAU, or, might put in a slightly higher bearish double top, as occurred in 2004 (January/April 2004 double top versus HUI Wave 3 long term cycle high on 12-2-03 and the XAU peaked 1-6-04).
HUI/XAU are peaking in rollover mode versus the 11-7-07 cycle highs. A Wave 1 Cyclical Bull Market cycle high (cycle began in late 2000) might have occurred today, see 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=.
I'm looking to short HUI/XAU this week (in a very short term countertrend Wave B upcycle), after the monthly upcycle trendline since 12-18-07 clearly breaks down and does a very short term 2-3 day Wave A (-3%+ decline) downcycle.
The US Dollar probably entered a Cyclical Bull Market in November 2007 after being in a Bear Market since late 2005, see http://stockcharts.com/charts/gallery.html?%24usd, gold stocks have been underperforming gold since 11-7-07, which is a very bearish sign, and, the gold COT data is very bearish from a big picture perspective, etc.
The gold COT (Commitments Of Traders) data remains bearish, see the third/last 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 1-8-08 (traded net short 8529 gold futures and options contracts versus trading net short 16,658 and 12,456 the previous two weeks), trading a significant long position (added 14,077 long gold futures and options contracts versus 5608 and 8002 added the previous two weeks), correctly anticipating short term strength, but, continuing to go massively short (added 22,606 short gold futures and options contracts versus 22,266 and 20,458 added the previous two weeks), as they've done in recent months.
So, the gold COT (Commitments Of Traders) data is short term mixed and long term bearish. Some significant gold strength this week wasn't surprising, but, it's very likely to be a great shorting opportunity.
Gold's action recently is exactly what one would expect near a very important cycle high.
In new annotated chart one at http://www.joefrocks.com/GoldStockCharts.html one can see that gold's Wave 1 Cyclical Bull Market (since April 2001) uptrend line (note that it went parabolic in mid 2005) is at $700ish, and, the primary Secular Bull Market (should last about 20 years, there should be two more Cyclical Bull markets, corresponding to Elliott Waves 3 and 5) uptrend line is at $490ish.
If you think that gold will keep rising in the parabolic fashion it has since mid 2005 for the next 10-15 years I have some very affordable prime real estate in Afghanistan for you, with a great view of all the action.Gold should fall to $700ish or less in the next few months, and, in the next 12-18 months (Wave 2 Cyclical Bear Market) gold should fall to $500-525.
Trust me, ignore the gold nitwits and con artists who don't understand (or are conning people) cycles, basic technical analysis (such as relatively flat primary trendlines), Elliott Wave patterns, the COT (Commitments of Traders) data, etc.
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
1:30 PM
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