SPX, NDX, RUT Very Short Term Cycle Lows Might Have Occurred Near Session's End
SPX (S & P 500), NDX, RUT very short term cycle lows might have occurred near session's end, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=. Since putting in a very short term Wave 1 cycle high late yesterday SPX did an Elliott Wave ABC down up down pattern, BUT, it isn't clear that it's been completed, there could be one more significant Wave C plunge early on Monday.
The Wave A down move from late yesterday until very early today is obvious, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=, as is the countertrend Wave B rebound that peaked about 2.5 hours into the session. To keep it simple, the rebound in the final hour might have been a Wave B type move, it isn't crystal clear, and there were many reasons to be cautious and wait before going long.
The reasons why I didn't go long RUT yet (http://stockcharts.com/charts/gallery.html?%24rut, and, http://finance.yahoo.com/q/ta?s=%5Erut&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=) via the Ultra Long ETF UWM are as follows:
1. The WMT Lead Indicator wasn't clearly bullish today, and, closed at a slightly bearish -0.05% versus SPX (S & P 500).
2. WMT had some bearish large spikes on it's intraday chart near session's end that usually portend significant weakness, 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=. The spike that occurred about a half hour before session's end is very large.
3. Reliable lead indicator Walmart (WMT) has a very large bearish spike on today's candle on the daily candlestick chart, see http://stockcharts.com/charts/gallery.html?wmt, and, the candle is black, indicating a bearish close below the open.
4. Assuming that WMT (and SPX, NDX, RUT) put in an intermediate term cycle low on Wednesday 1-9-08, it's rising bottoms uptrend should begin relatively flat, which clearly points to more/likely downside on Monday, and, the likelihood that WMT will fill the downside gap at 46.90 created at yesterday 1-10'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=.
5. SPX (http://stockcharts.com/charts/gallery.html?%24spx), NDX, RUT didn't hit 2% follow through monthly cycle buy signals yet.
The WMT Lead Indicator was very bullish the past six sessions, at -0.05% versus SPX (S & P 500) today/on 1-11, at +2.40% on 1-10, at +0.66% on 1-9, +0.57% on 1-8, at +1.21% on 1-7, and, at +1.04% on 1-4.
Especially if WMT fills it's downside gap at 46.90, there's likely to be a great entry point on Monday.
Based on the very bullish WMT Lead Indicator, the major averages are likely to rally substantially the next few weeks (during the monthly upcycle), probably until the Fed's rate decision (at the Fed meeting/FOMC on 1-30), then a selloff on the news/monthly downcycle (5-7 session decline) is likely to begin shortly after the rate decision (should obviously pop more/longer if there’s a half point rate cut versus a quarter point rate cut).
If the Fed cuts by a quarter point the market will probably immediately plunge, because, Chairman Bernanke has clearly signaled that a half point/0.50% rate cut is in the offing. If the Fed cuts by the expected half point, then, a relatively brief spike/relief rally is likely, that will probably be a great selling opportunity.
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, and, note the bullish very large inverse spike on 1-9's candle.
However, before trading SPX/NDX/RUT aggressively long it makes sense to wait for a strong multi day short term Wave 1 upcycle (has obviously begun), 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.
The XAU might have put in a nearly perfect bearish double top today at 195.51 versus the 11-7-07 cycle high at 195.50, see http://stockcharts.com/charts/gallery.html?%24xau.
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 next week won't be surprising, but, it's very likely to be a great shorting opportunity.
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 NEM Lead Indicator is mostly bearish recently, it was a very bullish +1.10% versus the XAU today/on 1-11, it was a bullish +0.59% on 1-10, it was a bearish -0.55% on 1-9, it was a bearish -0.81% on 1-8, was -0.05% on 1-7, -0.42% on 1-4, -0.56% on 1-3, +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.
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
The Wave A down move from late yesterday until very early today is obvious, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=, as is the countertrend Wave B rebound that peaked about 2.5 hours into the session. To keep it simple, the rebound in the final hour might have been a Wave B type move, it isn't crystal clear, and there were many reasons to be cautious and wait before going long.
The reasons why I didn't go long RUT yet (http://stockcharts.com/charts/gallery.html?%24rut, and, http://finance.yahoo.com/q/ta?s=%5Erut&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=) via the Ultra Long ETF UWM are as follows:
1. The WMT Lead Indicator wasn't clearly bullish today, and, closed at a slightly bearish -0.05% versus SPX (S & P 500).
2. WMT had some bearish large spikes on it's intraday chart near session's end that usually portend significant weakness, 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=. The spike that occurred about a half hour before session's end is very large.
3. Reliable lead indicator Walmart (WMT) has a very large bearish spike on today's candle on the daily candlestick chart, see http://stockcharts.com/charts/gallery.html?wmt, and, the candle is black, indicating a bearish close below the open.
4. Assuming that WMT (and SPX, NDX, RUT) put in an intermediate term cycle low on Wednesday 1-9-08, it's rising bottoms uptrend should begin relatively flat, which clearly points to more/likely downside on Monday, and, the likelihood that WMT will fill the downside gap at 46.90 created at yesterday 1-10'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=.
5. SPX (http://stockcharts.com/charts/gallery.html?%24spx), NDX, RUT didn't hit 2% follow through monthly cycle buy signals yet.
The WMT Lead Indicator was very bullish the past six sessions, at -0.05% versus SPX (S & P 500) today/on 1-11, at +2.40% on 1-10, at +0.66% on 1-9, +0.57% on 1-8, at +1.21% on 1-7, and, at +1.04% on 1-4.
Especially if WMT fills it's downside gap at 46.90, there's likely to be a great entry point on Monday.
Based on the very bullish WMT Lead Indicator, the major averages are likely to rally substantially the next few weeks (during the monthly upcycle), probably until the Fed's rate decision (at the Fed meeting/FOMC on 1-30), then a selloff on the news/monthly downcycle (5-7 session decline) is likely to begin shortly after the rate decision (should obviously pop more/longer if there’s a half point rate cut versus a quarter point rate cut).
If the Fed cuts by a quarter point the market will probably immediately plunge, because, Chairman Bernanke has clearly signaled that a half point/0.50% rate cut is in the offing. If the Fed cuts by the expected half point, then, a relatively brief spike/relief rally is likely, that will probably be a great selling opportunity.
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, and, note the bullish very large inverse spike on 1-9's candle.
However, before trading SPX/NDX/RUT aggressively long it makes sense to wait for a strong multi day short term Wave 1 upcycle (has obviously begun), 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.
The XAU might have put in a nearly perfect bearish double top today at 195.51 versus the 11-7-07 cycle high at 195.50, see http://stockcharts.com/charts/gallery.html?%24xau.
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 next week won't be surprising, but, it's very likely to be a great shorting opportunity.
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 NEM Lead Indicator is mostly bearish recently, it was a very bullish +1.10% versus the XAU today/on 1-11, it was a bullish +0.59% on 1-10, it was a bearish -0.55% on 1-9, it was a bearish -0.81% on 1-8, was -0.05% on 1-7, -0.42% on 1-4, -0.56% on 1-3, +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.
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
2:06 PM
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