Gold May Be Putting In A Bearish Double Top
Gold may be putting in a bearish double top (what you won't hear from the gold con artists, just like the US Dollar probably having bottomed in November), see http://stockcharts.com/charts/gallery.html?%24gold. Why StockCharts doesn't update gold during the trading session/same day is a mystery. It shows 12-31 right now. The chart for the gold ETF GLD shows today's candle, see http://stockcharts.com/charts/gallery.html?gld.
12-31's gold cycle high was $847.40 and today's so far is $860ish versus 11-7-07's cycle high at $848, and, has the look of a third/final Wave 5 cycle high (of the short term upcycle since 12-18-07), along with HUI/XAU (http://stockcharts.com/charts/gallery.html?%24hui).
Big spike moves tend to mark important cycle highs. Gold's peaking in rollover mode, lagging HUI/XAU as it tends to do at important cycle highs/lows, versus the 11-7-07 cycle high. 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.
Note that the NEM Lead Indicator was a very bullish +1.38% versus the XAU on Monday 12-31. The NEM Lead Indicator isn't necessarily a next day indicator, but, in a short term Wave 5 move it will usually "get factored in" the next day (or possibly the same day, with a lag time between NEM and the XAU of a few hours), because, the XAU is near it's point of maximum strength.
One has to consider what cycle(s) the XAU is in, in order to assess the likely impact of the NEM Lead Indicator. If the XAU was in a short term Wave C then there might be a lag time of a few days before a sharp rally occurred, especially if it was also in a longer term Wave C downcycle (intermediate or long term).
The 5 day NEM Lead Indicator is very bearish, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.
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 (traded net short 12,456 gold futures and options contracts), trading a significant long position (added 8002 long gold futures and options contracts), correctly anticipating short term strength, but, continuing to go massively short (added 20,458 short gold futures and options contracts), as they've done in recent months.
So, the gold COT (Commitments Of Traders) data is short term and long term bearish. Some significant gold strength this week wasn't surprising, but, it's very likely to be a great shorting opportunity.
HUI/XAU are doing Wave B of the Wave A intermediate term downcycle since 11-7-07 (start of the Wave 2 Cyclical Bear Market), see http://stockcharts.com/charts/gallery.html?%24hui. In HUI's chart one can see that Wave B of Wave A of the intermediate term downcycle (late November) only lasted four sessions, which indicates that it is (likely) in fact Wave B of Wave A and not Wave B of the intermediate term downcycle since 11-7-07.
HUI/XAU/gold all appear to be putting in important third/final Wave 5 cycle highs of their countertrend Wave B upcycle since 12-18-07 (gold's peaking in rollover mode, which is similar to a Wave B).
Previously I said that HUI/XAU were doing Wave B of Wave C of Wave A down (of a Wave A intermediate term downcycle). The count has simplified to simply Wave B of a Wave A intermediate term downcycle. Wave A of the Wave A intermediate term downcycle bottomed on 12-18-07.
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
12-31's gold cycle high was $847.40 and today's so far is $860ish versus 11-7-07's cycle high at $848, and, has the look of a third/final Wave 5 cycle high (of the short term upcycle since 12-18-07), along with HUI/XAU (http://stockcharts.com/charts/gallery.html?%24hui).
Big spike moves tend to mark important cycle highs. Gold's peaking in rollover mode, lagging HUI/XAU as it tends to do at important cycle highs/lows, versus the 11-7-07 cycle high. 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.
Note that the NEM Lead Indicator was a very bullish +1.38% versus the XAU on Monday 12-31. The NEM Lead Indicator isn't necessarily a next day indicator, but, in a short term Wave 5 move it will usually "get factored in" the next day (or possibly the same day, with a lag time between NEM and the XAU of a few hours), because, the XAU is near it's point of maximum strength.
One has to consider what cycle(s) the XAU is in, in order to assess the likely impact of the NEM Lead Indicator. If the XAU was in a short term Wave C then there might be a lag time of a few days before a sharp rally occurred, especially if it was also in a longer term Wave C downcycle (intermediate or long term).
The 5 day NEM Lead Indicator is very bearish, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.
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 (traded net short 12,456 gold futures and options contracts), trading a significant long position (added 8002 long gold futures and options contracts), correctly anticipating short term strength, but, continuing to go massively short (added 20,458 short gold futures and options contracts), as they've done in recent months.
So, the gold COT (Commitments Of Traders) data is short term and long term bearish. Some significant gold strength this week wasn't surprising, but, it's very likely to be a great shorting opportunity.
HUI/XAU are doing Wave B of the Wave A intermediate term downcycle since 11-7-07 (start of the Wave 2 Cyclical Bear Market), see http://stockcharts.com/charts/gallery.html?%24hui. In HUI's chart one can see that Wave B of Wave A of the intermediate term downcycle (late November) only lasted four sessions, which indicates that it is (likely) in fact Wave B of Wave A and not Wave B of the intermediate term downcycle since 11-7-07.
HUI/XAU/gold all appear to be putting in important third/final Wave 5 cycle highs of their countertrend Wave B upcycle since 12-18-07 (gold's peaking in rollover mode, which is similar to a Wave B).
Previously I said that HUI/XAU were doing Wave B of Wave C of Wave A down (of a Wave A intermediate term downcycle). The count has simplified to simply Wave B of a Wave A intermediate term downcycle. Wave A of the Wave A intermediate term downcycle bottomed on 12-18-07.
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, XAU
posted by Joe Ferrazzano at
7:29 AM
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