SPX (S & P 500) Entered A Short Term Wave 3 Upcycle Early Yesterday 3-20
SPX (S & P 500) entered a short term Wave 3 upcycle early yesterday 3-20, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c.
Yesterday 3-20's WMT Lead Indicator was an extremely bullish +2.44% versus the S & P 500 (SPX), see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, and, the five day WMT Lead Indicator is extremely bullish, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC.
After a likely Wave A intermediate term cycle low occurred for SPX (S & P 500)/NDX (NASDAQ 100) late on Monday 3-17, a very sharp short term Wave 1 upcycle/spike move occurred that peaked just after 3-19's open (filled upside gap at 1333.70 as expected), see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, then, the remainder of 3-19's session was a sharp decline/Wave 2 type decline (bottomed just after 3-20's open, some early weakness was expected) that corrected the very sharp rally/Wave 1 type move.
At session's end SPX appeared to be doing a modest Wave B type move and looks like it'll experience a brief plunge early on Monday, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=1d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c. So, some brief weakness is likely at Monday 3-24's open followed by significant/potentially sharp strength. The SPX wall of worry discussed three paragraphs down typically points to strength followed by weakness however.
SPX (S & P 500) has a bullish breakaway gap at 1276.60 from 3-18's open and WMT has one at 49.95. SPX's upside gap at 1333.70 got filled early on 3-19, now watch the upside gap at 1367.68.
SPX (S & P 500) and NDX (NASDAQ 100) probably put in Wave A intermediate term cycle (since 10-11-07 for SPX and late October 2007 for NDX) lows on 3-17, while RUT (Russell 2000) probably did so on 3-10, see http://stockcharts.com/charts/gallery.html?%24spx for SPX.
VIX fell a dramatic -10.79% on 3-20 versus the S & P 500 rising a sharp +2.39% on 3-20, which is an unusually large +8.40% rise in complacency (the SPX wall of worry shrank by -8.40% = -10.79% + +2.39% = +8.40% rise in complacency) that points to some strength followed by weakness on Monday 3-24.
I'll probably be looking to day trade the major averages ultra long on Monday via SSO, QLD, or UWM. If a big spike move occurs early on I obviously might look to day trade short. I'm also looking at trading some major averages options (probably calls) on Monday.
The Upside Surprise/Rollover Barometer is at "Likely" due to the aggressive Fed credit extended since 2-28-08, that fuels index related program buying ("only" 70% of the dollar volume on the NYSE), see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.
A Cyclical Bear Market probably began on 10-11-07 for SPX (S & P 500), began in late October 2007 for NDX (NASDAQ 100), began in late July 2007 for RUT (Russell 2000).
Concerning HUI/XAU/gold, the important thing now obviously is that HUI/XAU/gold hit a 5% follow through major sell signal, see http://stockcharts.com/charts/gallery.html?%24xau. The multi month uptrend lines broke down and 5%+ follow through occurred to the downside.
HUI/XAU/gold are in the midst of a major intermediate term downcycle, that's probably the start of an 18 monthish Wave 2 Cyclical Bear Market. HUI/XAU/gold will probably fall -50%+ in this bear market. Got cycles?
The NEM Lead Indicator was an extremely bearish -2.19% on 3-20, and, got more bearish at session's end, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem.
Looking at HUI's five day intraday candlestick chart, see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c, the spike move early in the session/on 3-20 appears to be a countertrend Wave B type move, so, it looks like another potentially large decline might occur early on Monday.
Gold and silver had two Cyclical Bear Markets in the previous Secular Bull Market that peaked in 1980, corresponding to Elliott Wave 2 and 4 downcycles, see http://tradethecycles.blogspot.com/2008/03/gold-and-silvers-two-cyclical-bear.html.
HUI/XAU very likely put in an intermediate term and a Wave 1 Cyclical Bull Market cycle high on 3-17 for HUI and on 3-14 for the XAU, see http://stockcharts.com/charts/gallery.html?%5Ehui. The XAU has a large bearish spike on 3-14's candle.
The -18.29% HUI Wave A type decline in a little under three sessions time so far (might not have bottomed yet), see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, is very likely an (probably extremely) important turning point/very strong sell signal. The more severe the weakness the stronger the sell signal tends to be, and, this weakness has been about as severe as it gets.
This severe weakness/action in recent days tells us something, just as the severe weakness/5% sell signal that occurred in May 2006 was a good one, since HUI/XAU/gold (http://stockcharts.com/charts/gallery.html?%24xau) were underwater versus the May 2006 cycle high for about 17 months.
A rollover long term upcycle was in effect from June 2006 (from October 2006 for the XAU, http://stockcharts.com/charts/gallery.html?%24xau) until the recent cycle highs, that was probably the Wave 1 Cyclical Bull Market (began in late 2000 for HUI/XAU and in April 2001 for gold, which was a slightly higher bullish double bottom with the 1999 cycle low) peaking in dramatic rollover mode versus the May 2006 cycle high. One can only discuss likely scenarios, not certainties.
The same excessive greed, blind bullishness, and criminal activity (very serious attempts to manipulate gold, silver, and some gold/silver stocks) seen in the 1999-2000 timeframe for growth stocks has been seen in recent months/years in the precious metals sector. Money (the allure of get rich quick) and ego (or lack thereof, I contend that someone who constantly needs to have his ego stroked has a very fragile ego) make many people do stupid things.
The gold nitwits and scam artists are no better (just as greedy and irresponsible) than the mortgage lenders making loans (adjustable rate mortgages) that they should have known would "blow up" in the near future and not be affordable. Gold will probably drop -40% to -50%+ in the next 18 months. Gold's primary Secular Bull Market uptrend line is at $500ish right now, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html.
The work of many gold writers reads like a scam. Gold will skyrocket (it already did obviously), gold won't go down this time (BS), the US is falling apart, etc etc. If it sounds too good to be true, it probably is. Gold and silver are great investments timed properly.
Gold and gold mining scams are commonplace, see http://tradethecycles.blogspot.com/2008/03/gold-and-gold-mining-scams-are.html.
....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Yesterday 3-20's WMT Lead Indicator was an extremely bullish +2.44% versus the S & P 500 (SPX), see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, and, the five day WMT Lead Indicator is extremely bullish, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC.
After a likely Wave A intermediate term cycle low occurred for SPX (S & P 500)/NDX (NASDAQ 100) late on Monday 3-17, a very sharp short term Wave 1 upcycle/spike move occurred that peaked just after 3-19's open (filled upside gap at 1333.70 as expected), see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, then, the remainder of 3-19's session was a sharp decline/Wave 2 type decline (bottomed just after 3-20's open, some early weakness was expected) that corrected the very sharp rally/Wave 1 type move.
At session's end SPX appeared to be doing a modest Wave B type move and looks like it'll experience a brief plunge early on Monday, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=1d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c. So, some brief weakness is likely at Monday 3-24's open followed by significant/potentially sharp strength. The SPX wall of worry discussed three paragraphs down typically points to strength followed by weakness however.
SPX (S & P 500) has a bullish breakaway gap at 1276.60 from 3-18's open and WMT has one at 49.95. SPX's upside gap at 1333.70 got filled early on 3-19, now watch the upside gap at 1367.68.
SPX (S & P 500) and NDX (NASDAQ 100) probably put in Wave A intermediate term cycle (since 10-11-07 for SPX and late October 2007 for NDX) lows on 3-17, while RUT (Russell 2000) probably did so on 3-10, see http://stockcharts.com/charts/gallery.html?%24spx for SPX.
VIX fell a dramatic -10.79% on 3-20 versus the S & P 500 rising a sharp +2.39% on 3-20, which is an unusually large +8.40% rise in complacency (the SPX wall of worry shrank by -8.40% = -10.79% + +2.39% = +8.40% rise in complacency) that points to some strength followed by weakness on Monday 3-24.
I'll probably be looking to day trade the major averages ultra long on Monday via SSO, QLD, or UWM. If a big spike move occurs early on I obviously might look to day trade short. I'm also looking at trading some major averages options (probably calls) on Monday.
The Upside Surprise/Rollover Barometer is at "Likely" due to the aggressive Fed credit extended since 2-28-08, that fuels index related program buying ("only" 70% of the dollar volume on the NYSE), see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.
A Cyclical Bear Market probably began on 10-11-07 for SPX (S & P 500), began in late October 2007 for NDX (NASDAQ 100), began in late July 2007 for RUT (Russell 2000).
Concerning HUI/XAU/gold, the important thing now obviously is that HUI/XAU/gold hit a 5% follow through major sell signal, see http://stockcharts.com/charts/gallery.html?%24xau. The multi month uptrend lines broke down and 5%+ follow through occurred to the downside.
HUI/XAU/gold are in the midst of a major intermediate term downcycle, that's probably the start of an 18 monthish Wave 2 Cyclical Bear Market. HUI/XAU/gold will probably fall -50%+ in this bear market. Got cycles?
The NEM Lead Indicator was an extremely bearish -2.19% on 3-20, and, got more bearish at session's end, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem.
Looking at HUI's five day intraday candlestick chart, see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c, the spike move early in the session/on 3-20 appears to be a countertrend Wave B type move, so, it looks like another potentially large decline might occur early on Monday.
Gold and silver had two Cyclical Bear Markets in the previous Secular Bull Market that peaked in 1980, corresponding to Elliott Wave 2 and 4 downcycles, see http://tradethecycles.blogspot.com/2008/03/gold-and-silvers-two-cyclical-bear.html.
HUI/XAU very likely put in an intermediate term and a Wave 1 Cyclical Bull Market cycle high on 3-17 for HUI and on 3-14 for the XAU, see http://stockcharts.com/charts/gallery.html?%5Ehui. The XAU has a large bearish spike on 3-14's candle.
The -18.29% HUI Wave A type decline in a little under three sessions time so far (might not have bottomed yet), see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, is very likely an (probably extremely) important turning point/very strong sell signal. The more severe the weakness the stronger the sell signal tends to be, and, this weakness has been about as severe as it gets.
This severe weakness/action in recent days tells us something, just as the severe weakness/5% sell signal that occurred in May 2006 was a good one, since HUI/XAU/gold (http://stockcharts.com/charts/gallery.html?%24xau) were underwater versus the May 2006 cycle high for about 17 months.
A rollover long term upcycle was in effect from June 2006 (from October 2006 for the XAU, http://stockcharts.com/charts/gallery.html?%24xau) until the recent cycle highs, that was probably the Wave 1 Cyclical Bull Market (began in late 2000 for HUI/XAU and in April 2001 for gold, which was a slightly higher bullish double bottom with the 1999 cycle low) peaking in dramatic rollover mode versus the May 2006 cycle high. One can only discuss likely scenarios, not certainties.
The same excessive greed, blind bullishness, and criminal activity (very serious attempts to manipulate gold, silver, and some gold/silver stocks) seen in the 1999-2000 timeframe for growth stocks has been seen in recent months/years in the precious metals sector. Money (the allure of get rich quick) and ego (or lack thereof, I contend that someone who constantly needs to have his ego stroked has a very fragile ego) make many people do stupid things.
The gold nitwits and scam artists are no better (just as greedy and irresponsible) than the mortgage lenders making loans (adjustable rate mortgages) that they should have known would "blow up" in the near future and not be affordable. Gold will probably drop -40% to -50%+ in the next 18 months. Gold's primary Secular Bull Market uptrend line is at $500ish right now, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html.
The work of many gold writers reads like a scam. Gold will skyrocket (it already did obviously), gold won't go down this time (BS), the US is falling apart, etc etc. If it sounds too good to be true, it probably is. Gold and silver are great investments timed properly.
Gold and gold mining scams are commonplace, see http://tradethecycles.blogspot.com/2008/03/gold-and-gold-mining-scams-are.html.
....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
3:34 PM
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