SPX's (S & P 500) Wave 4 Down Of The Big Short Term Wave 1 Upcycle Might Have Bottomed Just Before Session's End
SPX's (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) Wave 4 down (began mid session Monday 3-24) of the big short term Wave 1 Upcycle since 3-17 might have bottomed just before session's end, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=. SPX's decline that occurred during the last 2/3 of the session appears to be a final Wave C type parabolic/steep decline.
Also, SPX put in a bullish large inverse spike on the 5 day intraday candlestick just before session's end, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, which is a sign that SPX might have put in a very short term Wave 4 (began 3-24) cycle low.
The WMT Lead Indicator (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) was a modestly bullish +0.32% versus SPX today/on 3-28, was +0.15% on 3-27, and, was +0.60% on 3-26.
SPX (S & P 500) has an upside gap at 1367.68 that might get filled in the near future. SPX (S & P 500) has a bullish breakaway gap at 1276.60 from 3-18's open and WMT has one at 49.95 from 3-18's open.
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 significant -0.66% today/on 3-28 versus the S & P 500 falling a significant -0.80% on 3-28, which is a significant +1.46% rise in complacency (the SPX wall of worry shrank by -1.46% = -0.66% + -0.80% = +1.46% rise in complacency) that points to some significant weakness on Monday 3-28.
I'll be looking to day trade the major averages ultra long early on Monday via SSO, QLD, or UWM once the very short term downcycle bottoms. I'll also be 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).
HUI/XAU/gold are doing a short term countertrend Wave B upcycle since 3-20, following last week's huge short term Wave A downcycle (HUI fell -18.29% in a little under three sessions, and, bottomed on 3-20) that triggered a very important 5% follow through major sell signal, see http://stockcharts.com/charts/gallery.html?%24xau.
HUI/XAU/gold probably entered Wave 5 of the short term countertrend Wave B upcycle today, since there's an up down up down pattern on the daily chart since 3-20, when Wave B started, with a large bullish inverse spike on today 3-28's candle, see http://stockcharts.com/charts/gallery.html?%24hui.
It's also possible and probably likely (as I think about it more) that today's cycle low was a Wave 2 of Wave B cycle low, since the first up down of the up down up down pattern on the daily chart might be part of Wave 1 of the short term Wave B. I'll have to put some thought into that (note that StockCharts didn't label the first up move cycle high but did label the second, which makes it a likely very short term Wave 1 cycle high, see http://stockcharts.com/charts/gallery.html?%24hui. I don't know what their criteria is for labeled important cycle highs, but, they seem to have a high batting average). Either way a very short term cycle low probably occurred today 3-28 for HUI/XAU.
When the final short term countertrend Wave B (began 3-20) cycle high occurs there's likely to be a large bearish spike on the daily candle, and, the NEM Lead Indicator should be extremely bearish. Also, waiting for a sharp very short term Wave A type downcycle (sell signal, look for the short term Wave B upcycle trendline to clearly break down) before holding a short position/puts overnight (look to enter trades in a very short term countertrend Wave B) makes a lot of sense.
From HUI's 5 day intraday candlestick chart it looks like a significant/sharp Wave C type decline will occur early on Monday 3-31, see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, so, there might be a good shorting opportunity early on Monday. I'll be looking to short GDX, the Gold Miners ETF.
The five day NEM Lead Indicator is extremely bearish, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.
The NEM Lead Indicator was a bullish +0.80% versus the XAU today/on 3-28, was a modestly bearish -0.42% versus the XAU on 3-27, was a very bearish -1.44% on 3-26, was an extremely bearish -1.85% on 3-25, was an extremely bearish -2.19% on 3-20, and, was a bearish -0.63% on 3-24, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem.
Concerning HUI/XAU/gold, the important thing now 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 (gold might lag and peak in rollover mode) 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?
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 short term Wave A downcycle in a little under three sessions time last week, 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, the weakness was about as severe as it gets.
The severe weakness/action recently 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.
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
Also, SPX put in a bullish large inverse spike on the 5 day intraday candlestick just before session's end, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, which is a sign that SPX might have put in a very short term Wave 4 (began 3-24) cycle low.
The WMT Lead Indicator (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) was a modestly bullish +0.32% versus SPX today/on 3-28, was +0.15% on 3-27, and, was +0.60% on 3-26.
SPX (S & P 500) has an upside gap at 1367.68 that might get filled in the near future. SPX (S & P 500) has a bullish breakaway gap at 1276.60 from 3-18's open and WMT has one at 49.95 from 3-18's open.
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 significant -0.66% today/on 3-28 versus the S & P 500 falling a significant -0.80% on 3-28, which is a significant +1.46% rise in complacency (the SPX wall of worry shrank by -1.46% = -0.66% + -0.80% = +1.46% rise in complacency) that points to some significant weakness on Monday 3-28.
I'll be looking to day trade the major averages ultra long early on Monday via SSO, QLD, or UWM once the very short term downcycle bottoms. I'll also be 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).
HUI/XAU/gold are doing a short term countertrend Wave B upcycle since 3-20, following last week's huge short term Wave A downcycle (HUI fell -18.29% in a little under three sessions, and, bottomed on 3-20) that triggered a very important 5% follow through major sell signal, see http://stockcharts.com/charts/gallery.html?%24xau.
HUI/XAU/gold probably entered Wave 5 of the short term countertrend Wave B upcycle today, since there's an up down up down pattern on the daily chart since 3-20, when Wave B started, with a large bullish inverse spike on today 3-28's candle, see http://stockcharts.com/charts/gallery.html?%24hui.
It's also possible and probably likely (as I think about it more) that today's cycle low was a Wave 2 of Wave B cycle low, since the first up down of the up down up down pattern on the daily chart might be part of Wave 1 of the short term Wave B. I'll have to put some thought into that (note that StockCharts didn't label the first up move cycle high but did label the second, which makes it a likely very short term Wave 1 cycle high, see http://stockcharts.com/charts/gallery.html?%24hui. I don't know what their criteria is for labeled important cycle highs, but, they seem to have a high batting average). Either way a very short term cycle low probably occurred today 3-28 for HUI/XAU.
When the final short term countertrend Wave B (began 3-20) cycle high occurs there's likely to be a large bearish spike on the daily candle, and, the NEM Lead Indicator should be extremely bearish. Also, waiting for a sharp very short term Wave A type downcycle (sell signal, look for the short term Wave B upcycle trendline to clearly break down) before holding a short position/puts overnight (look to enter trades in a very short term countertrend Wave B) makes a lot of sense.
From HUI's 5 day intraday candlestick chart it looks like a significant/sharp Wave C type decline will occur early on Monday 3-31, see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, so, there might be a good shorting opportunity early on Monday. I'll be looking to short GDX, the Gold Miners ETF.
The five day NEM Lead Indicator is extremely bearish, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.
The NEM Lead Indicator was a bullish +0.80% versus the XAU today/on 3-28, was a modestly bearish -0.42% versus the XAU on 3-27, was a very bearish -1.44% on 3-26, was an extremely bearish -1.85% on 3-25, was an extremely bearish -2.19% on 3-20, and, was a bearish -0.63% on 3-24, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem.
Concerning HUI/XAU/gold, the important thing now 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 (gold might lag and peak in rollover mode) 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?
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 short term Wave A downcycle in a little under three sessions time last week, 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, the weakness was about as severe as it gets.
The severe weakness/action recently 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.
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
1:24 PM
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