.......A Very Complacent Gold And XAU Market

XAU Implied Volatility (see http://www.ivolatility.com/options.j?ticker=xau:&R=1&period=12&chart=2) points to likely severe weakness on Monday, after the expected (see next paragraph) early (probably brief) strength, because, it fell -3.00% to 47.500 on 1-25 from 48.970 on 1-24 despite a -0.19% decline in the XAU on 1-25 (normally XAU Implied Volatility will rise in response to weakness, indicating a rise in fear), which is a very sharp (3-6%) +3.19% rise in complacency (-3.00% decline in XAU Implied Volatility on 1-25 + -0.19% decline in the XAU on 1-25 = -3.19% decline in the XAU wall of worry on 1-25 = +3.19% rise in complacency on 1-25) that points to likely severe weakness on Monday.

"Today 1-25's HUI/XAU decline was probably a Wave A type decline. Based on the intraday cycles/Elliott Wave count (http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c), and, today's bullish NEM Lead Indicator, at +0.74% versus the XAU today/1-25, HUI/XAU will probably experience a (probably brief) countertrend Wave B rebound early on Monday, in which I'm going to look to short GDX, the Gold Miners ETF." See previous post at http://tradethecycles.blogspot.com/2008/01/huixau-short-term-countertrend-wave-b.html.

CBOE Market Statistics reveals a very complacent gold market (see http://www.cboe.com/data/mktstat5.aspx#DGL), that's probably going to get crushed soon:

PowerShares DB Gold Fund - (DGL) Put/Call Ratio is 114/254 = 0.449 on 1-25, and, the open interest DB Gold Fund - (DGL) Put/Call Ratio is 615/1677 = 0.367.

A DB Gold Fund - (DGL) Put/Call Ratio below 0.500 reveals a very high level of complacency that points to dramatic/substantial weakness soon. From 0.500 to 0.749 is a complacent gold market. From 0.750 to 0.999 is a neutral/typical range. From 1.000 to 1.200 is a fearful gold market. From 1.200 to 1.399 is a very high level of fear, and, at or above 1.400 is an extremely fearful gold market.

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

HUI NEM XAU