The Major Averages And Walmart (WMT) Are Overbought (Edit - Corrected Paragraph Six)
The major averages and Walmart (WMT) are overbought (Williams %R, Stochastics, etc), see SPX (S & P 500) at http://stockcharts.com/charts/gallery.html?%24spx.
SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68 (NDX at 1781.93, RUT at 687.97), see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=.
SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) strength is likely early tomorrow, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=, because, SPX completed an intraday Elliott Wave ABC down up down pattern near session's end. However, SPX is overbought and the move early tomorrow will be a Wave 5 type move (intraday SPX did an up down up down and probably entered Wave 5 shortly before session's end) that might be so brief that it'll be difficult if not impossible to trade long.
I'll probably be looking to trade both the major averages (via SDS, QID, TWM) and HUI/XAU/gold short tomorrow, and, will look to trade the major averages long early on. I'll also be looking at trading some major averages options (probably puts) on Friday.
The modest SPX strength today is probably what held HUI/XAU/gold together, thanks to index related program buying. Had SPX been weak HUI/XAU/gold would have probably experienced severe weakness today.
What I've been calling a big short term Wave 1 upcycle since 3-17 will now be called a monthly upcycle as I said yesterday. Since entering Wave 5 of the monthly upcycle very early on 3-31 SPX (S & P 500) has done an up down up down pattern, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=, and, Wave 5 of a short term Wave 5 upcycle probably began just after today 4-3's open (correction from "just before today 4-3's close"). Early tomorrow should be Wave 5 of Wave 5 of a short term Wave 5 upcycle since very early on 3-31.
The Elliott Wave count jives with today 4-3's bullish WMT Lead Indicator, at +0.73% versus SPX, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=on&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC.
Today's wall of worry shrinkage/significant rise in complacency points to significant SPX weakness tomorrow after likely early strength. VIX fell a significant -0.94% today/on 4-3 versus the S & P 500 rising a slight +0.13% on 4-3, which is a significant +0.81% rise in complacency (the SPX wall of worry shrank by -0.81% = -0.94% + +0.13% = +0.81% rise in complacency) that points to significant weakness on Friday 4-4.
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) 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) did so on 3-10, see http://stockcharts.com/charts/gallery.html?%24spx for SPX.
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 (HUI/gold since 4-1, the XAU entered Wave B on 3-20), following the week before last's huge very short term Wave A downcycle (HUI fell -18.29% in a little under three sessions) that triggered a very important 5% follow through major sell signal, see http://stockcharts.com/charts/gallery.html?%24xau.
From HUI's 5 day intraday candlestick chart (intraday Elliott Wave count) and today 4-3's bearish NEM Lead Indicator at -0.60% versus the XAU and 4-2's very bearish NEM Lead Indicator, at -1.00% versus the XAU (http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem), it looks like there will be early weakness on Friday 4-4, see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. Wave 2 down of the short term countertrend Wave B upcycle may bottom tomorrow or Monday.
I'll be looking to short the Gold Miners ETF GDX or NEM/GLD early tomorrow.
If you're looking to exit gold/silver stock and/or metals positions, the short term countertrend Wave B upcycle, that began on 4-1 for HUI/gold and on 3-20 for the XAU, will be an opportunity to do so.
When the final short term countertrend Wave B 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.
While I feel that gold has already gone to the moon for now (Wave 1 Cyclical Bull Market peaked/peaking), labeling me a "gold Bear" is absurd, when I think gold will probably reach $2000-2200 at the Secular Bull Market cycle high in 2018-2020ish, see http://tradethecycles.blogspot.com/2008/04/gold-will-not-reach-1500-for-about-6-7.html.
It shows just how corrupt and looney the gold cockroaches are, saying that someone who has ALWAYS MAINTAINED that gold was in a Secular Bull Market and that gold would go to $2000-2200ish is a gold Bear. Beware of gold scam artists.
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.
The deflationary major worldwide economic downcycle is obviously curtailing commodities demand. The gold buffoons don't even understand fundamentally what's going on.
For the five day NEM Lead Indicator 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 bearish -0.60% versus the XAU today/on 4-3, was a very bearish -1.00% versus the XAU on 4-2, was a very bullish +1.10% on 4-1, was a bearish -0.74% on 3-31, was a bullish +0.80% versus the XAU on 3-28, was a modestly bearish -0.42% 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.
The rest of this post is old info, left in for reference purposes and for new readers.
Gold's primary Secular Bull Market (since April 2001) uptrend line is at $500ish, see chart two at http://www.joefrocks.com/GoldStockCharts.html. Morons leaving phony comments (and most gold writers) don't even understand basic technical analysis.
Nearly all if not all gold writers have long term investors chase huge parabolic spike moves, which is poor advice. Any investment is only timely for long term investors near it's primary trendline.
I constantly get bogus comments from morons saying how gold can't fall to it's primary trendline, currently at $500ish. Gold HAS to fall to it's primary trendline. This is very basic stuff.
Try finding a link to a gold writer who shows (even if the trendline is wrong) and discusses gold's primary multi year uptrend line since April 2001, without which it's impossible to know when gold is timely for long term investors.
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?
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 very short term Wave A downcycle in a little under three sessions time the week before last, 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.
Here's a bearish gold article http://www.marketoracle.co.uk/Article4159.html. Ski/Jeff Kern (http://www.321gold.com/editorials/kern/current.html) and Jack Chan (http://www.321gold.com/editorials/chan/chan033108.html) have turned bearish also.
Gold and gold mining scams are commonplace, see http://tradethecycles.blogspot.com/2008/03/gold-and-gold-mining-scams-are.html.
.......http://www.JoeF.ROCKS.com/ .
HUI NEM XAU
SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68 (NDX at 1781.93, RUT at 687.97), see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=.
SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) strength is likely early tomorrow, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=, because, SPX completed an intraday Elliott Wave ABC down up down pattern near session's end. However, SPX is overbought and the move early tomorrow will be a Wave 5 type move (intraday SPX did an up down up down and probably entered Wave 5 shortly before session's end) that might be so brief that it'll be difficult if not impossible to trade long.
I'll probably be looking to trade both the major averages (via SDS, QID, TWM) and HUI/XAU/gold short tomorrow, and, will look to trade the major averages long early on. I'll also be looking at trading some major averages options (probably puts) on Friday.
The modest SPX strength today is probably what held HUI/XAU/gold together, thanks to index related program buying. Had SPX been weak HUI/XAU/gold would have probably experienced severe weakness today.
What I've been calling a big short term Wave 1 upcycle since 3-17 will now be called a monthly upcycle as I said yesterday. Since entering Wave 5 of the monthly upcycle very early on 3-31 SPX (S & P 500) has done an up down up down pattern, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=, and, Wave 5 of a short term Wave 5 upcycle probably began just after today 4-3's open (correction from "just before today 4-3's close"). Early tomorrow should be Wave 5 of Wave 5 of a short term Wave 5 upcycle since very early on 3-31.
The Elliott Wave count jives with today 4-3's bullish WMT Lead Indicator, at +0.73% versus SPX, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=on&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC.
Today's wall of worry shrinkage/significant rise in complacency points to significant SPX weakness tomorrow after likely early strength. VIX fell a significant -0.94% today/on 4-3 versus the S & P 500 rising a slight +0.13% on 4-3, which is a significant +0.81% rise in complacency (the SPX wall of worry shrank by -0.81% = -0.94% + +0.13% = +0.81% rise in complacency) that points to significant weakness on Friday 4-4.
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) 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) did so on 3-10, see http://stockcharts.com/charts/gallery.html?%24spx for SPX.
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 (HUI/gold since 4-1, the XAU entered Wave B on 3-20), following the week before last's huge very short term Wave A downcycle (HUI fell -18.29% in a little under three sessions) that triggered a very important 5% follow through major sell signal, see http://stockcharts.com/charts/gallery.html?%24xau.
From HUI's 5 day intraday candlestick chart (intraday Elliott Wave count) and today 4-3's bearish NEM Lead Indicator at -0.60% versus the XAU and 4-2's very bearish NEM Lead Indicator, at -1.00% versus the XAU (http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem), it looks like there will be early weakness on Friday 4-4, see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. Wave 2 down of the short term countertrend Wave B upcycle may bottom tomorrow or Monday.
I'll be looking to short the Gold Miners ETF GDX or NEM/GLD early tomorrow.
If you're looking to exit gold/silver stock and/or metals positions, the short term countertrend Wave B upcycle, that began on 4-1 for HUI/gold and on 3-20 for the XAU, will be an opportunity to do so.
When the final short term countertrend Wave B 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.
While I feel that gold has already gone to the moon for now (Wave 1 Cyclical Bull Market peaked/peaking), labeling me a "gold Bear" is absurd, when I think gold will probably reach $2000-2200 at the Secular Bull Market cycle high in 2018-2020ish, see http://tradethecycles.blogspot.com/2008/04/gold-will-not-reach-1500-for-about-6-7.html.
It shows just how corrupt and looney the gold cockroaches are, saying that someone who has ALWAYS MAINTAINED that gold was in a Secular Bull Market and that gold would go to $2000-2200ish is a gold Bear. Beware of gold scam artists.
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.
The deflationary major worldwide economic downcycle is obviously curtailing commodities demand. The gold buffoons don't even understand fundamentally what's going on.
For the five day NEM Lead Indicator 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 bearish -0.60% versus the XAU today/on 4-3, was a very bearish -1.00% versus the XAU on 4-2, was a very bullish +1.10% on 4-1, was a bearish -0.74% on 3-31, was a bullish +0.80% versus the XAU on 3-28, was a modestly bearish -0.42% 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.
The rest of this post is old info, left in for reference purposes and for new readers.
Gold's primary Secular Bull Market (since April 2001) uptrend line is at $500ish, see chart two at http://www.joefrocks.com/GoldStockCharts.html. Morons leaving phony comments (and most gold writers) don't even understand basic technical analysis.
Nearly all if not all gold writers have long term investors chase huge parabolic spike moves, which is poor advice. Any investment is only timely for long term investors near it's primary trendline.
I constantly get bogus comments from morons saying how gold can't fall to it's primary trendline, currently at $500ish. Gold HAS to fall to it's primary trendline. This is very basic stuff.
Try finding a link to a gold writer who shows (even if the trendline is wrong) and discusses gold's primary multi year uptrend line since April 2001, without which it's impossible to know when gold is timely for long term investors.
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?
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 very short term Wave A downcycle in a little under three sessions time the week before last, 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.
Here's a bearish gold article http://www.marketoracle.co.uk/Article4159.html. Ski/Jeff Kern (http://www.321gold.com/editorials/kern/current.html) and Jack Chan (http://www.321gold.com/editorials/chan/chan033108.html) have turned bearish also.
Gold and gold mining scams are commonplace, see http://tradethecycles.blogspot.com/2008/03/gold-and-gold-mining-scams-are.html.
.......http://www.JoeF.ROCKS.com/ .
HUI NEM XAU
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
1:22 PM
7 Comments:
I totally disagree with your analysis that we are currently faced with deflation.
The sub-prime fallout is a symptom of over-inflation and the response from the Fed and central banks world wide has been to fight over-inflation with, MORE inflation.
Look around, Chinese growth is continuing at break neck speed and now India is joining the party.
By
Anonymous, at 2:45 PM
The last I checked the Shanghai SSE Index was down -43% to -44% in about five months as I posted recently, which screams that a deflationary bust has begun. I imagine that India has gotten whacked also. Most major world indices are down dramatically the past 5-6+ months I think. Welcome to the global village!
By
Joe Ferrazzano, at 3:08 PM
Someone left this comment that I basically already answered:
"Once again we have a US market commentator looking at the world as though it is one continent.
Open up your eyes buddy because the US just caught a cold and the rest of the world has hardly sneezed.
China and India are now where its at, the US has lost its strangle hold.
The sooner you buffoons from NA realise it the sooner you'll begin to think globally rather than just domestically all the time!"
By
Joe Ferrazzano, at 3:10 PM
Many foreign stocks are obviously listed in the US now. Guess what happens when market weakness/program selling occurs. They (tend to) get DUMPED!
By
Joe Ferrazzano, at 3:13 PM
"The last I checked the Shanghai SSE Index was down -43% to -44% in about five months"
And the last time I checked growth for the last Q was running at just over 9% annualised.
The Chinese populace has nowhere near the market participation/exposure that western economies have.
Ever tried to stop a runaway locomotive by standing in front of it?
By
Anonymous, at 4:10 PM
The last I checked the Shanghai SSE Index was down -43% to -44% in about five months, which says that the runaway locomotive is heading down not up.
The Chinese economic stats might make the US ones seem accurate, from what I've read. Check Hong Kong's stats, I read those were more realistic. The bottom line is that the Shanghai SSE Index reveals the truth. Buckle up!
By
Joe Ferrazzano, at 4:15 PM
The 1929 deflationary collapse had different circumstances. Whilst history does to some extent repeat, the circumstances are not always the same.
Remember the last big deflationary scare? ,,,,here's a clue, LTCM.
All you deflationists were screaming it out then as well and many of you have been screaming it ever since.
Like I said before, there is one big difference between 29 and now.
Deflation will surely come, but not for a while yet.
Buckle up alright because there is soooooo much capital parked on the sidelines ready to re-enter the market that you shorts are gonna get creamed!
By
Anonymous, at 6:02 PM
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