The US Dollar COT (Commitments Of Traders) Data Is Very Bullish

The US Dollar COT (Commitments Of Traders) data is very bullish, see the last data at http://www.cftc.gov/dea/options/deanybtsof.htm, since the US Dollar Commercial Traders traded aggressively net long for the fourth time in the last five weeks.

The US Dollar appears to have put in a Wave 2 intermediate term cycle low at 74.85 yesterday/Friday 2-1-08, see http://stockcharts.com/charts/gallery.html?%24usd, and, appears to have put in a Cyclical Bear Market cycle low in November 2007 at 74.48 (probably entered a Cyclical Bull Market in November 2007).

The US Dollar dramatically reversed course on Friday, closing at 75.48, much closer to the session cycle high at 75.57 than the session cycle low at 74.85. Note the bullish large inverse spike on Friday 2-1's candle, and, the candle is white, indicating a bullish close above the open, see http://stockcharts.com/charts/gallery.html?%24usd.

The Gold COT (Commitments Of Traders) data reveals bearish aggressive long liquidation again by the savvy non contrarian gold Commercial Traders in the five day period ending 1-29-08, similar to the previous week's data, see the third/last data at http://www.cftc.gov/dea/options/deacmxsof.htm. Also similar to the previous week, the savvy non contrarian gold Commercial Traders engaged in aggressive short covering, apparently getting surprised by the sustained strong upside action in gold.

Gold's action recently jives completely with a Wave 1 Cyclical Bull Market (since April 2001, actually bottomed in 1999 (slightly lower double bottom cycle low), but, didn't begin sustained uptrending bull market behavior until after the April 2001 cycle low) that's in the process of peaking.

Gold lags HUI/XAU at important cycle highs/lows (by months sometimes) as I've said many times. HUI put in a Wave 3 long term cycle high on 12-2-03, the XAU did so on 1-6-04, and, gold peaked in April 2004, putting in a slightly higher bearish double top cycle high versus it's January 2004 cycle high.

Since 11-7-07 the XAU has had only one session (1-14-08) where it made any upside progress (HUI had three), see http://stockcharts.com/charts/gallery.html?%24xau. The XAU obviously dramatically rolled over, probably put in a Wave 1 Cyclical Bull Market cycle high on 1-14-08 at 199.25, then put in a short term countertrend Wave B cycle high on 1-30-08, see the new annotated XAU candlestick chart dated 1-30-08, see chart one at http://www.joefrocks.com/GoldStockCharts.html.

HUI/XAU/NEM entered a short term Wave C downcycle late on Wednesday 1-30, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c. Watch downside gaps for NEM (50.50), GDX (48.19), and the XAU (175.65, http://stockcharts.com/charts/gallery.html?%24xau) that should get filled in the next few sessions.

The short term Wave C cycle low target for HUI/XAU/GDX/NEM based on gaps is 161 for the XAU (shortly after filling the downside gap at 161.75), 380-400 for HUI (I need to check the less straightforward HUI historical data to finetune the target), 42.50 for GDX (shortly after filling the downside gap at 42.87), and 47 for NEM (shortly after filling the downside gap at 47.39). One can look at the daily charts for HUI/XAU/GDX/NEM (http://stockcharts.com/charts/gallery.html?%24xau) and see that the Wave C cycle low targets are reasonable, based on where the short term Wave A cycle lows occurred.

The NEM Lead Indicator was a bearish -0.97% versus the XAU on Friday/on 2-1, and, was a bearish -0.87% versus the XAU on 1-31.

XAU Implied Volatility points to weakness again on Monday, since it fell -0.53% to 45.620 on 2-1 from 45.865 on 1-31 despite a -0.91% decline in the XAU on 2-1 (normally XAU Implied Volatility rises in response to weakness, indicating a rise in fear), which is a -0.53% + -0.91% = -1.44% decline in the XAU wall of worry, which is a significant +1.44% rise in complacency that points to some significant XAU weakness on Monday.

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

HUI NEM XAU