"Think the Economy Is Bad? Wait Till the States Cut Back"

"Think the Economy Is Bad? Wait Till the States Cut Back," see http://www.nytimes.com/2008/06/01/weekinreview/01uchitelle.html. More bad news for gold.

Part of the article:

"State and city governments have yet to shrink the economy; indeed, they have even managed to prop it up. They have quietly maintained their spending at pre-crisis levels even as they warn of numerous cutbacks forced on them by declining tax revenues. The cutbacks, however, are written into budgets for a fiscal year that begins on July 1, a month away. In the meantime the states and cities, often drawing on rainy-day savings, have carried their share of the load for the national economy."

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI

..........."The Trouble in Housing Trickles Up"

"The Trouble in Housing Trickles Up," see http://www.nytimes.com/2008/06/01/business/01town.html. Powerful deflationary forces gather momentum. Bad news for gold.

Part of the article:

"Nearly a year after the mortgage meltdown became front-page news, the Schneiders’ travails reflect how the nation’s housing woes have moved beyond subprime borrowers in working-class neighborhoods and into the realm of upper-middle-class homeowners.

Last week, a new report showed that house prices nationwide were off 14.1 percent from a year ago, while the Commerce Department said sales of new homes remained near their lowest levels since 1991.

THE market here isn’t like those of Florida or California, which have followed a boom-and-bust pattern, or of Cleveland, where foreclosures have overwhelmed entire neighborhoods. Instead, what’s playing out here is a kind of paralysis, with wide swaths of the market frozen and only the very top end showing signs of life.

This may hint at what’s in store for other real estate markets around the nation that managed to avoid the excesses of the last decade but still find themselves struggling now. Indeed, the recent economic trajectory of Greensboro, a city of 242,000 smack in the middle of the rolling Carolina Piedmont, has run parallel to that of the country as a whole.

Sales of existing homes here are down 22.5 percent from the first quarter of 2007, according to G. Donald Jud, a University of North Carolina economist who tracks the market for local Realtors, compared with a 21.7 percent drop in home sales nationally. Unemployment in the Greensboro area averaged 5.1 percent in April, versus 5 percent nationwide. The mortgage delinquency rate of 4.04 percent, meanwhile, is nearly identical to the country’s rate, 4.35 percent."

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI

SPX's (S & P 500) Countertrend Wave B Upcycle Of The Wave 4 Monthly Downcycle Since 5-19-08 Appears To Have Peaked (Updated, See Paragraph 3)

SPX's (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) countertrend Wave B upcycle (since 5-27) of the Wave 4 Monthly Downcycle (since 5-19-08) appears to have peaked late yesterday 5-29, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c, which jives with today 5-30's bearish WMT Lead Indicator, at -0.50% versus SPX, and, jives with VIX's significant decline versus SPX's slight rise, VIX fell -1.71% today 5-30 versus SPX rising +0.15%, which is a significant +1.56% rise in complacency (-1.71% + +0.15% = -1.56% decline in the SPX (S & P 500) wall of worry) that points to some significant SPX weakness on Monday 6-3.

Yesterday 5-29's late SPX decline was probably a Wave A type move, today's very anemic strength was probably a countertrend Wave B type move, and, SPX appears to have entered a Wave C type move late today, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c.

Update on 5-31-08: An alternate definite possibility (the short term WMT Lead Indicator is very bullish) is that SPX's (S & P 500) very anemic uptrend on Friday is a deceptive very flat rollover Wave 5 upcycle, that will complete/spike on Monday and take out late 5-29's cycle high. If so, then there might be a good shorting opportunity early on Monday.

SPX (S & P 500) should complete the Wave C type move (began late today) early on Monday, then, there might be strength for much of Monday's session, during which I'll look to "ultra" short SPX or NDX/RUT via SDS, QID, or, TWM. I might also short WMT. WMT has downside gaps at 56.40, 55.75, and 52.68.

As bullish as the short term WMT Lead Indicator is, 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, and, it was a bullish bordering on very bullish +0.96% versus SPX (S & P 500) yesterday 5-29, today's very anemic SPX action jives with the upcycle from 5-27 to late yesterday 5-29 being a countertrend Wave B type move (of the Wave 4 monthly downcycle since 5-19-08), and, jives with it having peaked late yesterday 5-29. Also, the upcycle from 5-27 to late yesterday 5-29 failed to do (might do a Wave 5 spike on Monday though) the usual Elliott Wave 12345 up down up down up upcycle pattern, which is obviously another bearish sign.

The WMT Lead Indicator was -0.50% versus SPX today 5-30, was +0.96% versus SPX on 5-29, was +0.82% on 5-28, was +0.48% on 5-27, +0.78% on 5-23, +1.23% on 5-22, +0.32% on 5-21, +0.13% on 5-20.

VIX fell -1.71% today 5-30 versus SPX rising +0.15%, which is a significant +1.56% rise in complacency (-1.71% + +0.15% = -1.56% decline in the SPX (S & P 500) wall of worry) that points to some significant weakness on Monday 6-3.

The SPX/NDX/RUT Wave 3 Monthly Upcycle that began on 4-15-08 peaked on 5-19, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c= and see http://stockcharts.com/charts/gallery.html?%24spx. SPX/NDX/RUT all have large bearish spikes on 5-19's candle.

An SPX Wave 2 monthly cycle low occurred on 4-15-08, and, a countertrend Wave B intermediate term upcycle began on 3-17-08 for SPX and NDX (3-10-08 for the Russell 2000 (RUT)). A Wave 1 monthly cycle high occurred on 4-7-08.

SPX has an upside gap at 1426.63 (probably won't get filled in Wave B) that might get filled in the countertrend Wave B upcycle of the Wave 4 monthly downcycle since 5-19-08.

Since the SPX Wave A move that began on 5-19 bottomed on Tuesday 5-27, there's a reference point (1373.07) for trading the Wave C move (Wave 4 monthly cycle low target). Wave C obviously should bottom well below the Wave A cycle low at 1373.07 on 5-27, and, SPX (S & P 500) should fill it's downside gap at 1356.65 in the Wave C move and bottom at 1350-1355 = Wave 4 monthly cycle low target.

Downside gap filling action (1356.65 for SPX, 1917.70, 1881.65, and 1840.88 (likely bullish breakaway gap) for NDX, 692.06 for RUT, 55.15 (filled) and maybe 52.68 for WMT) is expected (normally would occur) in the Wave 4 monthly downcycle.

Since important cycle highs/lows tend to occur shortly after gap filling action is completed, both timewise and pricewise, reasonable Wave 4 monthly cycle low targets are 1350-1355 for SPX, 1875-1880 for NDX, and, 690ish for RUT.

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/very likely began on 10-11-07 for SPX (S & P 500), began in late October 2007 for NDX (NASDAQ 100), and, began in late July 2007 for RUT (Russell 2000).

SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68, 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) 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.

GDX/HUI/XAU/NEM/GLD tried to fill yesterday's big bearish breakaway upside gaps today, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, but, it looks like, based on the flat/peaking intraday charts and today's bearish NEM (-0.65% versus the XAU) and WMT (-0.50% versus SPX) Lead Indicators, that GDX/HUI/XAU/NEM/GLD will try to but probably won't (as discussed below) fill today's downside gaps on Monday.

Reliable lead indicator NEM appears to have put in a short term Wave A cycle low yesterday at 46.64, see http://stockcharts.com/charts/gallery.html?nem. StockCharts has labeled it an important cycle low, and, they have a great record of labeling important cycle highs/lows, but, they obviously don't indicate if it's a short term, monthly, or other timeframe cycle high/low.

GDX is also labeled as having put in a short term Wave A cycle low yesterday 5-29 at 45.13, see http://stockcharts.com/charts/gallery.html?gdx, so, this will be a good test of StockCharts approach used for determining cycle highs/lows, which is that of a candlestick author I think I read at their site recently. I'll try to find out who the author is and in what book/web site the approach can be found. There's some info at this link (see http://stockcharts.com/commentary/mailbag/mailbag20000614.html), but, I need to do a lot more research on their approach, I just quickly read the mailbag reply.

HUI, XAU, and GLD are also labeled as having put in a short term Wave A cycle low yesterday 5-29, see http://stockcharts.com/charts/gallery.html?gld, so, this will be a very good test of StockCharts approach used for determining important cycle highs/lows.

Also, NEM's bullish white (close above the open) candle today 5-30 has a bullish medium inverse spike, see http://stockcharts.com/charts/gallery.html?nem. It could be that NEM bottomed yesterday and that GDX/HUI/XAU/GLD might bottom/put in a short term Wave A cycle low on Monday, however, I suspect that StockCharts approach used for determining cycle highs/lows is a very good one and that a short term Wave A cycle low probably occurred yesterday 5-29.

GDX/HUI/XAU/GLD entered Wave C of the Wave A major intermediate term downcycle since mid March 2008 on Wednesday 5-21-08, see http://tradethecycles.blogspot.com/2008/05/gold-etf-gld-analysis.html. Also, see the COT data that jives big time with that analysis at http://tradethecycles.blogspot.com/2008/05/latest-gold-cot-commitments-of-traders.html.

GDX/GLD/NEM/XAU created huge bearish breakaway gaps at 46.96, 89.14, 48.22, and 185.02 at 5-29's open, see http://finance.yahoo.com/q/ta?s=GDX&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c. Watch GDX's downside gaps at 44.49, 44.10, 43.18, and 42.65.

GDX/GLD/NEM/XAU created huge bearish breakaway gaps at 47.75, 91.23, 48.74, and 188.10 at 5-27's open, which correctly pointed to more downside early on 5-28, see http://finance.yahoo.com/q/ta?s=GDX&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c.

GLD failed to fill it's big bearish breakaway gap at 92.56 from April 18 last week, confirming the bearish case, see http://stockcharts.com/charts/gallery.html?gld, and, it created additional big breakaway gaps at 91.23 on 5-27 and at 89.14 on 5-29. Therefore, GLD has three very large very bearish breakaway gaps now. It'll try to but probably won't fill all of those gaps in the short term countertrend Wave B upcycle, that might have begun yesterday 5-29.

I hope you realize that "Deflation Is Everywhere!," see http://tradethecycles.blogspot.com/2008/05/deflation-is-everywhere.html.

Reliable lead indicator NEM put in a short term Wave 1 cycle high on 5-8 in rollover mode, see http://finance.yahoo.com/q/ta?s=NEM&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c. Wave 2 or 4 bottomed at 44.19 on 5-13 and Wave 3 or 5 peaked on 5-21 at 50.89. NEM is probably in Wave B up of a monthly downcycle, we'll see.

NEM created a large bullish breakaway gap at 45.10 on 5-15 and another one at 46.73 on 5-16 that got filled on 5-29 (46.50 cycle low on 5-29). NEM filled it's bearish upside breakaway gap at 48.72 from 3-20 on 5-15, which confirmed the 5% follow through major buy signal.

5-21 is an HUI/XAU/GDX Wave 5 cycle high of the countertrend Wave B monthly upcycle since 5-1-08, see http://stockcharts.com/charts/gallery.html?%24xau. Note the large bearish spike on 5-21's candle.

The NEM Lead Indicator was a bearish -0.65% versus the XAU today 5-30, was a very bullish +1.11% versus the XAU on 5-29, was +0.14% on 5-28, was +0.42% on 5-27, +0.14% on 5-23, was -0.23% on 5-22, was +0.68% on 5-21, was -0.83% on 5-20, was -0.21% on 5-19, was a very bullish +1.56% on 5-16, was -0.27% on 5-15, was a very bullish +1.93% on 5-14, was -0.37% on 5-13, was -0.65% on 5-12, at -0.32% on 5-9, at -1.32% on 5-8, at -0.21% on 5-7, at -0.25% on 5-6, at -1.33% on 5-5.

NEM has remaining downside gaps at 42.29, and 41.52. 45.22 (filled) and 44.51 (filled) got filled in the short term Wave 2 downcycle that began on 5-8 and bottomed on 5-13. GDX has downside gaps at 44.49, 44.10, 43.18, and 42.65.

Reliable Lead Indicator NEM put in a Wave 2 major intermediate term cycle low on 5-1 at 42.36, see http://stockcharts.com/charts/gallery.html?nem. Wave 1 peaked in January at 57.44 and NEM entered a Cyclical Bull Market in June 2007 after putting in a Cyclical Bear Market (began 1-31-06) cycle low at 37.84.

NEM is a good example of a gold stock that's in a Cyclical Bull Market, and, can be traded aggressively long now that a 5% follow through major buy signal occurred on 5-8 (after breaking the Wave 2 major intermediate term downcycle trendline). I'm sure there are many other gold/silver stocks that are in a Cyclical Bull Market. The HUI/XAU likely Wave 2 Cyclical Bear Market isn't a "death knell" for all gold/silver stocks.

However, the gold/silver stock trading long/investing environment is likely to be much more difficult now that HUI/XAU are probably in a Cyclical Bear Market. In other words one should probably trade in the same direction as HUI/XAU (with the wind at your back).

Reliable Lead Indicator NEM's Cyclical Bear Market from 1-31-06 until June 2007 (about 17 months, fell -38.51%, and, since NEM tends to be less volatile than most gold/silver stocks, HUI/XAU falling -45-50%+ is likely) is further strong evidence that HUI/XAU probably entered a 15-18+ month Cyclical Bear Market in March 2008.

Probably over half of all gold/silver stocks are in a Cyclical Bear Market right now, and, some of the ones that aren't might have been helped a lot by program buying. It would be interesting to see what % of gold/silver stocks that are in a Cyclical Bull Market are also in indexes.

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.

See http://tradethecycles.blogspot.com/2008/04/crashing-velocity-circulation-of-money.html. My previous 18 month $500-550 cycle low target range for gold's Wave 2 Cyclical Bear Market is probably too optimistic. Probably 2-3 years and $450-500 is more realistic, given the extremely deflationary environment.

"The Bull Case For Gold And Why It Is Totally Incorrect," see http://tradethecycles.blogspot.com/2008/04/bull-case-for-gold-and-why-it-is.html.

For HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal nine weeks ago, 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.

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 rest of the info is for reference purposes or 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.

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.

The real estate/too easy mortgage boom from 2002 until early 2006 was very inflationary. The current bust is obviously the diametric opposite/very deflationary. Combined with plummeting major world stock markets, many annihilated financial stocks, plummeting money market rates and bond yields, plummeting credit/debt instruments, tight credit and mortgage lending, real estate bust, etc and it's pretty obvious that the environment is very deflationary.

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI

SPX's (S & P 500) Countertrend Wave B Upcycle Of The Wave 4 Monthly Downcycle Since 5-19-08 Probably Didn't Peak Yet

SPX's (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) countertrend Wave B upcycle (since 5-27-08, NDX/RUT since 5-23) of the Wave 4 Monthly Downcycle (since 5-19-08) probably didn't peak yet, it looks like it'll do Wave 5 up early tomorrow (there's an up down up down pattern since 5-27's Wave A cycle low), see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, which jives with today's bullish WMT Lead Indicator, at +0.96% versus SPX today 5-29, and, jives with the extremely bullish short term 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.

SPX filled it's upside gap at 1394.35 today. Walmart (WMT) filled it's upside gap at 58.02 today 5-29. WMT has downside gaps at 56.40, 55.75, and 52.68.

The WMT Lead Indicator was +0.96% versus SPX today/on 5-29, was +0.82% versus SPX on 5-28, was +0.48% on 5-27, +0.78% on 5-23, +1.23% on 5-22, +0.32% on 5-21, +0.13% on 5-20.

VIX fell -4.88% today 5-29 versus SPX rising +0.53%, which is a very sharp +4.35% rise in complacency (-4.88% + +0.53% = -4.35% decline in the SPX (S & P 500) wall of worry) that points to some severe weakness on Friday 5-30.

The SPX/NDX/RUT Wave 3 Monthly Upcycle that began on 4-15-08 peaked on 5-19, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c= and see http://stockcharts.com/charts/gallery.html?%24spx. SPX/NDX/RUT all have large bearish spikes on 5-19's candle.

An SPX Wave 2 monthly cycle low occurred on 4-15-08, and, a countertrend Wave B intermediate term upcycle began on 3-17-08 for SPX and NDX (3-10-08 for the Russell 2000 (RUT)). A Wave 1 monthly cycle high occurred on 4-7-08.

Friday 5-30 I'll be looking to trade SPX/NDX/RUT ultra long via SSO, QLD, or UWM. I might day trade ultra short via SDS, QID, or TWM if I think the countertrend Wave B move has peaked. Today I day traded QID, buying at 37.70 and selling at 37.82.

SPX has an upside gap at 1426.63 (probably won't get filled in Wave B) that might get filled in the countertrend Wave B upcycle of the Wave 4 monthly downcycle since 5-19-08.

Since the SPX Wave A move that began on 5-19 bottomed on Tuesday 5-27, there's a reference point (1373.07) for trading the Wave C move (Wave 4 monthly cycle low target). Wave C obviously should bottom well below the Wave A cycle low at 1373.07 on 5-27, and, SPX (S & P 500) should fill it's downside gap at 1356.65 in the Wave C move and bottom at 1350-1355 = Wave 4 monthly cycle low target.

Downside gap filling action (1356.65 for SPX, 1917.70, 1881.65, and 1840.88 (likely bullish breakaway gap) for NDX, 692.06 for RUT, 55.15 (filled) and maybe 52.68 for WMT) is expected (normally would occur) in the Wave 4 monthly downcycle.

Since important cycle highs/lows tend to occur shortly after gap filling action is completed, both timewise and pricewise, reasonable Wave 4 monthly cycle low targets are 1350-1355 for SPX, 1875-1880 for NDX, and, 690ish for RUT. WMT has downside gaps at 55.15 (filled) and 52.68.

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/very likely began on 10-11-07 for SPX (S & P 500), began in late October 2007 for NDX (NASDAQ 100), and, began in late July 2007 for RUT (Russell 2000).

SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68, 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) 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.

GDX/HUI/XAU/GLD entered Wave C of the Wave A major intermediate term downcycle since mid March 2008 on Wednesday 5-21-08, see http://tradethecycles.blogspot.com/2008/05/gold-etf-gld-analysis.html. Also, see the COT data that jives big time with that analysis at http://tradethecycles.blogspot.com/2008/05/latest-gold-cot-commitments-of-traders.html.

It turns out that GDX/HUI/XAU/GLD did not complete a short term Wave A downcycle yesterday 5-28, see http://stockcharts.com/charts/gallery.html?%24xau.

GDX/GLD/NEM/XAU created huge bearish breakaway gaps at 46.96, 89.14, 48.22, and 185.02 at today 5-29's open, which points to more downside early tomorrow, see http://finance.yahoo.com/q/ta?s=GDX&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=. Watch GDX's downside gaps at 44.49, 44.10, 43.18, and 42.65.

Given today 5-29's very bullish NEM Lead Indicator, at +1.11% versus the XAU, there's a good chance that a short term countertrend Wave B rebound will begin tomorrow.

GDX/GLD/NEM/XAU created huge bearish breakaway gaps at 47.75, 91.23, 48.74, and 188.10 at 5-27's open, which correctly pointed to more downside early yesterday, see http://finance.yahoo.com/q/ta?s=GDX&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=.

GLD failed to fill it's big bearish breakaway gap at 92.56 from April 18 last week, confirming the bearish case, see http://stockcharts.com/charts/gallery.html?gld, and, it created additional big breakaway gaps at 91.23 on 5-27 and at 89.14 on 5-29.

Therefore, GLD has three very large very bearish breakaway gaps now. It'll try to but probably won't fill any of those gaps in the short term countertrend Wave B upcycle, that might begin tomorrow 5-30.

I hope you realize that "Deflation Is Everywhere!," see http://tradethecycles.blogspot.com/2008/05/deflation-is-everywhere.html.

Reliable lead indicator NEM put in a short term Wave 1 cycle high on 5-8 in rollover mode, see http://finance.yahoo.com/q/ta?s=NEM&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c. Wave 2 or 4 bottomed at 44.19 on 5-13 and Wave 3 or 5 peaked on 5-21 at 50.89. NEM is probably in Wave A down of a monthly downcycle, we'll see. NEM had a big spike move and filled it's upside gap at 48.72.

NEM created a large bullish breakaway gap at 45.10 on 5-15 and another one at 46.73 on 5-16 that got filled today 5-29 (46.50 cycle low on 5-29). NEM filled it's bearish upside breakaway gap at 48.72 from 3-20 on 5-15, which confirmed the 5% follow through major buy signal.

5-21 is an HUI/XAU/GDX Wave 5 cycle high of the countertrend Wave B monthly upcycle since 5-1-08, see http://stockcharts.com/charts/gallery.html?%24xau. Note the large bearish spike on 5-21's candle.

The NEM Lead Indicator was a very bullish +1.11% versus the XAU today 5-29, was a slightly bullish +0.14% versus the XAU on 5-28, was a modestly bullish +0.42% on 5-27, +0.14% on 5-23, was -0.23% on 5-22, was +0.68% on 5-21, was -0.83% on 5-20, was -0.21% on 5-19, was a very bullish +1.56% on 5-16, was -0.27% on 5-15, was a very bullish +1.93% on 5-14, was -0.37% on 5-13, was -0.65% on 5-12, at -0.32% on 5-9, at -1.32% on 5-8, at -0.21% on 5-7, at -0.25% on 5-6, at -1.33% on 5-5.

NEM has remaining downside gaps at 42.29, and 41.52. 45.22 (filled) and 44.51 (filled) got filled in the short term Wave 2 downcycle that began on 5-8 and bottomed on 5-13. GDX has downside gaps at 44.49, 44.10, 43.18, and 42.65.

Reliable Lead Indicator NEM put in a Wave 2 major intermediate term cycle low on 5-1 at 42.36, see http://stockcharts.com/charts/gallery.html?nem. Wave 1 peaked in January at 57.44 and NEM entered a Cyclical Bull Market in June 2007 after putting in a Cyclical Bear Market (began 1-31-06) cycle low at 37.84.

NEM is a good example of a gold stock that's in a Cyclical Bull Market, and, can be traded aggressively long now that a 5% follow through major buy signal occurred on 5-8 (after breaking the Wave 2 major intermediate term downcycle trendline). I'm sure there are many other gold/silver stocks that are in a Cyclical Bull Market. The HUI/XAU likely Wave 2 Cyclical Bear Market isn't a "death knell" for all gold/silver stocks.

However, the gold/silver stock trading long/investing environment is likely to be much more difficult now that HUI/XAU are probably in a Cyclical Bear Market. In other words one should probably trade in the same direction as HUI/XAU (with the wind at your back).

Reliable Lead Indicator NEM's Cyclical Bear Market from 1-31-06 until June 2007 (about 17 months, fell -38.51%, and, since NEM tends to be less volatile than most gold/silver stocks, HUI/XAU falling -45-50%+ is likely) is further strong evidence that HUI/XAU probably entered a 15-18+ month Cyclical Bear Market in March 2008.

Probably over half of all gold/silver stocks are in a Cyclical Bear Market right now, and, some of the ones that aren't might have been helped a lot by program buying. It would be interesting to see what % of gold/silver stocks that are in a Cyclical Bull Market are also in indexes.

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.

See http://tradethecycles.blogspot.com/2008/04/crashing-velocity-circulation-of-money.html. My previous 18 month $500-550 cycle low target range for gold's Wave 2 Cyclical Bear Market is probably too optimistic. Probably 2-3 years and $450-500 is more realistic, given the extremely deflationary environment.

"The Bull Case For Gold And Why It Is Totally Incorrect," see http://tradethecycles.blogspot.com/2008/04/bull-case-for-gold-and-why-it-is.html.

For HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal nine weeks ago, 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.

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 rest of the info is for reference purposes or 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.

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.

The real estate/too easy mortgage boom from 2002 until early 2006 was very inflationary. The current bust is obviously the diametric opposite/very deflationary. Combined with plummeting major world stock markets, many annihilated financial stocks, plummeting money market rates and bond yields, plummeting credit/debt instruments, tight credit and mortgage lending, real estate bust, etc and it's pretty obvious that the environment is very deflationary.

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI

...................Gold Isn't Protecting Us!

Gold (http://stockcharts.com/charts/gallery.html?gld), the commodity that has done basically nothing (in simple buy and hold terms) for 28 years, since the 1980 Secular Bull Market cycle high at $875ish, isn't "protecting us," instead, it's getting crushed. What a shocker that is.

The good thing about this Wave 2 Cyclical Bear Market since 3-17-08 is that it'll expose many gold writers for what they are, goofy, mindless, and, in some cases, corrupt village idiots.

Recently consumer confidence hit it's lowest level since June 1980, when gold approached $500 after peaking at $875ish in early 1980. This obviously jives with the very deflationary crashing velocity/circulation of money, that's more than offsetting the rapid money supply growth that some gold writers harp on.

Real estate is in a severe recession, autos are in a recession, mortgage, auto, and other types of lending are tight and getting tighter due to the credit crisis fallout, stocks are in a Cyclical Bear Market since mid/late 2007, credit/debt instruments and many financial stocks have crashed, etc. The environment is obviously very deflationary, yet, I haven't seen any other gold writer discuss it. Pretty sad and pathetic.

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, and, they're very likely in one now.

Game over village idiots!

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI

SPX (S & P 500) Probably Entered The Countertrend Wave B Upcycle Of The Wave 4 Monthly Downcycle Since 5-19-08 Yesterday 5-27

SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) entered the countertrend Wave B upcycle yesterday 5-27 (NDX/RUT did so on Friday 5-23) of the Wave 4 Monthly Downcycle since 5-19-08, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, which jives with the very bullish short term 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.

The WMT Lead Indicator was +0.82% versus SPX today/on 5-28, was +0.48% versus SPX on 5-27, +0.78% on 5-23, +1.23% on 5-22, +0.32% on 5-21, +0.13% on 5-20.

VIX fell -2.90% today 5-28 versus SPX rising +0.40%, which is a sharp +2.50% rise in complacency (-2.90% + +0.40% = -2.50% decline in the SPX (S & P 500) wall of worry) that points to some severe weakness on Thursday 5-29.

SPX will probably try to fill it's upside gap at 1394.35 early tomorrow. WMT might fill today 5-28's downside gap at 56.40 early tomorrow, and, will probably fill it's upside gap at 58.02 in this countertrend Wave B upcycle. WMT created a likely bullish breakaway gap at 55.75 at yesterday 5-27's open, that will probably get filled in the final Wave C of Wave C downcycle.

The SPX/NDX/RUT Wave 3 Monthly Upcycle that began on 4-15-08 peaked on 5-19, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c= and see http://stockcharts.com/charts/gallery.html?%24spx. SPX/NDX/RUT all have large bearish spikes on 5-19's candle.

An SPX Wave 2 monthly cycle low occurred on 4-15-08, and, a countertrend Wave B intermediate term upcycle began on 3-17-08 for SPX and NDX (3-10-08 for the Russell 2000 (RUT)). A Wave 1 monthly cycle high occurred on 4-7-08.

Thursday 5-28 I'll be looking to trade SPX/NDX/RUT ultra long via SSO, QLD, or UWM, and, I might trade WMT long, watching the upside gap at 58.02. Very early on I might day trade ultra short via SDS, QID, or TWM. Today I day traded QLD, buying at 86.779 and selling at 86.92.

SPX has upside gaps at 1394.35 (should get filled in Wave B) and at 1426.63 (probably won't get filled in Wave B) that might get filled in the countertrend Wave B upcycle of the Wave 4 monthly downcycle since 5-19-08.

Since the SPX Wave A move that began on 5-19 bottomed on Tuesday 5-27, there's a reference point (1373.07) for trading the Wave C move (Wave 4 monthly cycle low target). Wave C obviously should bottom well below the Wave A cycle low at 1373.07 on 5-27, and, SPX (S & P 500) should fill it's downside gap at 1356.65 in the Wave C move and bottom at 1350-1355 = Wave 4 monthly cycle low target.

Downside gap filling action (1356.65 for SPX, 1917.70, 1881.65, and 1840.88 (likely bullish breakaway gap) for NDX, 692.06 for RUT, 55.15 (filled) and maybe 52.68 for WMT) is expected (normally would occur) in the Wave 4 monthly downcycle.

Since important cycle highs/lows tend to occur shortly after gap filling action is completed, both timewise and pricewise, reasonable Wave 4 monthly cycle low targets are 1350-1355 for SPX, 1875-1880 for NDX, and, 690ish for RUT. WMT has downside gaps at 55.15 (filled) and 52.68.

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/very likely began on 10-11-07 for SPX (S & P 500), began in late October 2007 for NDX (NASDAQ 100), and, began in late July 2007 for RUT (Russell 2000).

SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68, 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) 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.

GDX/HUI/XAU/GLD entered Wave C of the Wave A major intermediate term downcycle since mid March 2008 on Wednesday 5-21-08, see http://tradethecycles.blogspot.com/2008/05/gold-etf-gld-analysis.html. Also, see the COT data that jives big time with that analysis at http://tradethecycles.blogspot.com/2008/05/latest-gold-cot-commitments-of-traders.html.

GDX/HUI/XAU/GLD completed a short term Wave A downcycle today 5-28, see http://stockcharts.com/charts/gallery.html?%24xau, and, note the large bullish inverse spike on today's white candle (white indicates a bullish close above the open).

GDX/GLD/NEM/XAU created huge bearish breakaway gaps at 47.75, 91.23, 48.74, and 188.10 at yesterday 5-27's open, which correctly pointed to more downside early today, see http://finance.yahoo.com/q/ta?s=GDX&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=.

GLD failed to fill it's big bearish breakaway gap at 92.56 from April 18 last week, confirming the bearish case, see http://stockcharts.com/charts/gallery.html?gld, and, it created another big one at 91.23 yesterday 5-27. Therefore, GLD has two large very bearish breakaway gaps now. It'll try to but probably won't fill 91.23 in this short term countertrend Wave B upcycle, that might have begun today 5-28 (did for GDX/HUI/XAU, but, gold tends to lag, and might not have bottomed yet.).

I hope you realize that "Deflation Is Everywhere!," see http://tradethecycles.blogspot.com/2008/05/deflation-is-everywhere.html.

Reliable lead indicator NEM put in a short term Wave 1 cycle high on 5-8 in rollover mode, see http://finance.yahoo.com/q/ta?s=NEM&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c. Wave 2 or 4 bottomed at 44.19 on 5-13 and Wave 3 or 5 peaked on 5-21 at 50.89. NEM is probably in Wave A down of a monthly downcycle, we'll see. NEM had a big spike move and filled it's upside gap at 48.72.

NEM created a large bullish breakaway gap at 45.10 on 5-15 and another one at 46.73 on 5-16 that didn't get filled today 5-28. NEM filled it's bearish upside breakaway gap at 48.72 from 3-20 on 5-15, which confirms the 5% follow through major buy signal.

5-21 is an HUI/XAU/GDX Wave 5 cycle high of the countertrend Wave B monthly upcycle since 5-1-08, see http://stockcharts.com/charts/gallery.html?%24xau. Note the large bearish spike on 5-21's candle.

The NEM Lead Indicator was a slightly bullish +0.14% versus the XAU today 5-28, was a modestly bullish +0.42% versus the XAU on 5-27, +0.14% on 5-23, was -0.23% on 5-22, was +0.68% on 5-21, was a bearish -0.83% on 5-20, was -0.21% on 5-19, was a very bullish +1.56% on 5-16, was -0.27% on 5-15, was a very bullish +1.93% on 5-14, was -0.37% on 5-13, was -0.65% on 5-12, at -0.32% on 5-9, at -1.32% on 5-8, at -0.21% on 5-7, at -0.25% on 5-6, at -1.33% on 5-5.

NEM has remaining downside gaps at 42.29, and 41.52. 45.22 (filled) and 44.51 (filled) got filled in the short term Wave 2 downcycle that began on 5-8 and bottomed on 5-13. GDX has downside gaps at 44.49, 44.10, 43.18, and 42.65.

Reliable Lead Indicator NEM put in a Wave 2 major intermediate term cycle low on 5-1 at 42.36, see http://stockcharts.com/charts/gallery.html?nem. Wave 1 peaked in January at 57.44 and NEM entered a Cyclical Bull Market in June 2007 after putting in a Cyclical Bear Market (began 1-31-06) cycle low at 37.84.

NEM is a good example of a gold stock that's in a Cyclical Bull Market, and, can be traded aggressively long now that a 5% follow through major buy signal occurred on 5-8 (after breaking the Wave 2 major intermediate term downcycle trendline). I'm sure there are many other gold/silver stocks that are in a Cyclical Bull Market. The HUI/XAU likely Wave 2 Cyclical Bear Market isn't a "death knell" for all gold/silver stocks.

However, the gold/silver stock trading long/investing environment is likely to be much more difficult now that HUI/XAU are probably in a Cyclical Bear Market. In other words one should probably trade in the same direction as HUI/XAU (with the wind at your back).

Reliable Lead Indicator NEM's Cyclical Bear Market from 1-31-06 until June 2007 (about 17 months, fell -38.51%, and, since NEM tends to be less volatile than most gold/silver stocks, HUI/XAU falling -45-50%+ is likely) is further strong evidence that HUI/XAU probably entered a 15-18+ month Cyclical Bear Market in March 2008.

Probably over half of all gold/silver stocks are in a Cyclical Bear Market right now, and, some of the ones that aren't might have been helped a lot by program buying. It would be interesting to see what % of gold/silver stocks that are in a Cyclical Bull Market are also in indexes.

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.

See http://tradethecycles.blogspot.com/2008/04/crashing-velocity-circulation-of-money.html. My previous 18 month $500-550 cycle low target range for gold's Wave 2 Cyclical Bear Market is probably too optimistic. Probably 2-3 years and $450-500 is more realistic, given the extremely deflationary environment.

"The Bull Case For Gold And Why It Is Totally Incorrect," see http://tradethecycles.blogspot.com/2008/04/bull-case-for-gold-and-why-it-is.html.

For HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal nine weeks ago, 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.

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 rest of the info is for reference purposes or 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.

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.

The real estate/too easy mortgage boom from 2002 until early 2006 was very inflationary. The current bust is obviously the diametric opposite/very deflationary. Combined with plummeting major world stock markets, many annihilated financial stocks, plummeting money market rates and bond yields, plummeting credit/debt instruments, tight credit and mortgage lending, real estate bust, etc and it's pretty obvious that the environment is very deflationary.

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI

.......Gold ETF (GLD) Bearish Breakaway Gaps - Major WARNING

GLD failed to fill it's big bearish breakaway gap at 92.56 from April 18 last week, confirming the bearish case, see http://stockcharts.com/charts/gallery.html?gld, and, it created another big one at 91.23 today 5-27.

The bogus cowardly incompetent corrupt gold pimps are all wet. See http://tradethecycles.blogspot.com/2008/05/latest-gold-cot-commitments-of-traders.html.

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI

SPX (S & P 500) Probably Entered The Countertrend Wave B Upcycle Of The Wave 4 Monthly Downcycle Since 5-19-08

SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) probably entered the countertrend Wave B upcycle (today 5-27, NDX/RUT did so on Friday 5-23) of the Wave 4 Monthly Downcycle since 5-19-08, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, which jives with the very bullish short term 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.

SPX will probably try to fill it's upside gap at 1394.35 early tomorrow. WMT filled it's upside gaps at 56.05 and 56.40 today, and, will probably fill it's upside gap at 58.02 in this countertrend Wave B upcycle. WMT created a likely bullish breakaway gap at 55.75 at today 5-27's open that will probably get filled in the final Wave C of Wave C downcycle.

The WMT Lead Indicator was +0.48% versus SPX on 5-27, +0.78% on 5-23, +1.23% on 5-22, +0.32% on 5-21, +0.13% on 5-20.

The SPX/NDX/RUT Wave 3 Monthly Upcycle that began on 4-15-08 peaked on 5-19, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c= and see http://stockcharts.com/charts/gallery.html?%24spx. SPX/NDX/RUT all have large bearish spikes on 5-19's candle.

An SPX Wave 2 monthly cycle low occurred on 4-15-08, and, a countertrend Wave B intermediate term upcycle began on 3-17-08 for SPX and NDX (3-10-08 for the Russell 2000 (RUT)). A Wave 1 monthly cycle high occurred on 4-7-08.

Wednesday 5-28 I'll be looking to trade SPX/NDX/RUT ultra long via SSO, QLD, or UWM, and, I might trade WMT long, watching the upside gap at 58.02. SPX has upside gaps at 1394.35 (should get filled in Wave B) and at 1426.63 (probably won't get filled in Wave B) that might get filled in the countertrend Wave B upcycle of the Wave 4 monthly downcycle since 5-19-08.

Once the SPX Wave A move that began on 5-19 bottoms, as it probably did today Tuesday 5-27, there'll be a reference point (1373.07) for trading the Wave C move (Wave 4 monthly cycle low target). Wave C obviously should bottom well below the likely Wave A cycle low at 1373.07 on 5-27, and, SPX (S & P 500) should fill it's downside gap at 1356.65 in the Wave C move and bottom at 1350-1355 = Wave 4 monthly cycle low target.

Downside gap filling action (1356.65 for SPX, 1917.70, 1881.65, and 1840.88 (likely bullish breakaway gap) for NDX, 692.06 for RUT, 55.15 (filled) and maybe 52.68 for WMT) is expected (normally would occur) in the Wave 4 monthly downcycle.

Since important cycle highs/lows tend to occur shortly after gap filling action is completed, both timewise and pricewise, reasonable Wave 4 monthly cycle low targets are 1350-1355 for SPX, 1875-1880 for NDX, and, 690ish for RUT. WMT has downside gaps at 55.15 (filled) and 52.68.

VIX rose +0.46% today 5-27 versus SPX rising +0.69%, which is a significant +1.15% rise in fear (+0.46% + +0.69% = +1.15% rise in the SPX (S & P 500) wall of worry) that points to some significant strength on Wednesday 5-28.

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/very likely began on 10-11-07 for SPX (S & P 500), began in late October 2007 for NDX (NASDAQ 100), and, began in late July 2007 for RUT (Russell 2000).

SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68, 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) 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.

GDX/HUI/XAU/GLD entered Wave C of the Wave A major intermediate term downcycle since mid March 2008 last Wednesday 5-21-08, see http://tradethecycles.blogspot.com/2008/05/gold-etf-gld-analysis.html. Also, see the COT data that jives big time with that analysis at http://tradethecycles.blogspot.com/2008/05/latest-gold-cot-commitments-of-traders.html.

I hope you realize that "Deflation Is Everywhere!," see http://tradethecycles.blogspot.com/2008/05/deflation-is-everywhere.html.

GDX/GLD/NEM/XAU created huge bearish breakaway gaps at 47.75, 91.23, 48.74, and, at 188.10 at today 5-27's open, which points to more likely downside early tomorrow, see http://finance.yahoo.com/q/ta?s=GDX&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=.

Reliable lead indicator NEM put in a short term Wave 1 cycle high on 5-8 in rollover mode, see http://finance.yahoo.com/q/ta?s=NEM&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c. Wave 2 or 4 bottomed at 44.19 on 5-13 and Wave 3 or 5 peaked on 5-21 at 50.89. NEM is probably in Wave A down of a monthly downcycle, we'll see. NEM had a big spike move and filled it's upside gap at 48.72.

NEM created a large bullish breakaway gap at 45.10 on 5-15 and another one at 46.73 on 5-16 that might get filled tomorrow 5-28. NEM filled it's bearish upside breakaway gap at 48.72 from 3-20 on 5-15, which confirms the 5% follow through major buy signal.

5-21 is an HUI/XAU Wave 5 cycle high of the countertrend Wave B monthly upcycle since 5-1-08, see http://stockcharts.com/charts/gallery.html?%24xau. Note the large bearish spike on 5-21's candle.

The NEM Lead Indicator was a modestly bullish +0.42% versus the XAU today 5-27, was a slightly bullish +0.14% versus the XAU on 5-23, was a slightly bearish -0.23% on 5-22, was a bullish +0.68% on 5-21, was a bearish -0.83% on 5-20, was -0.21% on 5-19, was a very bullish +1.56% on 5-16, was -0.27% on 5-15, was a very bullish +1.93% on 5-14, was -0.37% on 5-13, was -0.65% on 5-12, at -0.32% on 5-9, at -1.32% on 5-8, at -0.21% on 5-7, at -0.25% on 5-6, at -1.33% on 5-5.

NEM has remaining downside gaps at 42.29, and 41.52. 45.22 (filled) and 44.51 (filled) got filled in the short term Wave 2 downcycle that began on 5-8 and bottomed on 5-13. GDX has downside gaps at 44.49, 44.10, 43.18, and 42.65.

Reliable Lead Indicator NEM put in a Wave 2 major intermediate term cycle low on 5-1 at 42.36, see http://stockcharts.com/charts/gallery.html?nem. Wave 1 peaked in January at 57.44 and NEM entered a Cyclical Bull Market in June 2007 after putting in a Cyclical Bear Market (began 1-31-06) cycle low at 37.84.

NEM is a good example of a gold stock that's in a Cyclical Bull Market, and, can be traded aggressively long now that a 5% follow through major buy signal occurred on 5-8 (after breaking the Wave 2 major intermediate term downcycle trendline). I'm sure there are many other gold/silver stocks that are in a Cyclical Bull Market. The HUI/XAU likely Wave 2 Cyclical Bear Market isn't a "death knell" for all gold/silver stocks.

However, the gold/silver stock trading long/investing environment is likely to be much more difficult now that HUI/XAU are probably in a Cyclical Bear Market. In other words one should probably trade in the same direction as HUI/XAU (with the wind at your back).

Reliable Lead Indicator NEM's Cyclical Bear Market from 1-31-06 until June 2007 (about 17 months, fell -38.51%, and, since NEM tends to be less volatile than most gold/silver stocks, HUI/XAU falling -45-50%+ is likely) is further strong evidence that HUI/XAU probably entered a 15-18+ month Cyclical Bear Market in March 2008.

Probably over half of all gold/silver stocks are in a Cyclical Bear Market right now, and, some of the ones that aren't might have been helped a lot by program buying. It would be interesting to see what % of gold/silver stocks that are in a Cyclical Bull Market are also in indexes.

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.

See http://tradethecycles.blogspot.com/2008/04/crashing-velocity-circulation-of-money.html. My previous 18 month $500-550 cycle low target range for gold's Wave 2 Cyclical Bear Market is probably too optimistic. Probably 2-3 years and $450-500 is more realistic, given the extremely deflationary environment.

"The Bull Case For Gold And Why It Is Totally Incorrect," see http://tradethecycles.blogspot.com/2008/04/bull-case-for-gold-and-why-it-is.html.

For HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal nine weeks ago, 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.

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 rest of the info is for reference purposes or 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.

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.

The real estate/too easy mortgage boom from 2002 until early 2006 was very inflationary. The current bust is obviously the diametric opposite/very deflationary. Combined with plummeting major world stock markets, many annihilated financial stocks, plummeting money market rates and bond yields, plummeting credit/debt instruments, tight credit and mortgage lending, real estate bust, etc and it's pretty obvious that the environment is very deflationary.

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI

................Deflation Is Everywhere!

"As Credit Tightens, the Auto Industry Feels the Pain," see http://www.nytimes.com/2008/05/27/business/27auto.html.

Part of the article:

"The auto industry is getting sideswiped by the housing crisis.

Auto lenders and banks, closing their wallets, have prevented hundreds of thousands of consumers from getting the financing for a car. Home equity loans, which had been used in at least one of every nine deals, when lenders were more generous, are no longer a source of easy money for many prospective buyers. And used-car prices have fallen nearly 6 percent as repossessed cars and gas-guzzling trucks and S.U.V.’s flood auction lots.

Those forces, on top of the softening economy, are putting enormous pressure on the American auto industry as it faces what may be its worst year in more than a decade. About 14.95 million vehicles are expected to be sold in 2008, down from 16.2 million last year, as sales reach the lowest levels since 1995, according to the marketing firm J. D. Power & Associates.

The impact on the broader American economy could be profound. Not only is the car a consumer’s second biggest purchase after the home, but the auto industry remains one of nation’s most important economic engines. With less money available to fuel the industry’s growth, the businesses that support it are also facing the prospect of a sharp slowdown.

“It is a bleak picture, and it all hinges on the availability of financing,” said William Ryan, a financial analyst at Portales Partners who has followed the auto business for years. “The whole universe related to the auto industry is touched in some way — parts suppliers, manufacturers, salespeople, trucking people, the paint and metals industries. Even semiconductors.”

Within the auto sector, problems stemming from the continuing tightening of credit have already started to spread. Auto lenders like Chase, Capital One and GMAC are finding it harder and more expensive to obtain money for loans. Profits also look dimmer as the lenders absorb losses from defaults and pull back from making new loans."

Have you seen any other gold writer talk about the plainly obvious major deflationary factors?

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI

"Do Sharp Cuts In Home Prices Spell Buyer's Dream Or A Trap?"

"Do Sharp Cuts In Home Prices Spell Buyer's Dream Or A Trap?," see http://www.investors.com/editorial/IBDArticles.asp?artsec=16&issue=20080523&rss=1.

Part of the article:

"The latest housing headlines look bleak. The supply of unsold homes hit a 23-year peak last month, the National Association of Realtors said Friday.

Builders have slashed construction, but still-falling sales and a flood of foreclosed homes mean a recovery in prices might be far off.

"We've dug ourselves a hole. We just have too many units hanging out there," said William Wheaton, director of research at MIT's Center for Real Estate.

But there is a bottom somewhere to the housing hole. Past slumps, especially in hard-hit regional markets, seemed desperate at the time. Still, areas such as California and Texas eventually soared again.

What should prospective real estate investors be watching to catch the inevitable upturn?

Sales and home construction have to stop falling, but that's only a first step, analysts say. The glut of unsold housing has to come down sharply before prices can bottom. And like the stock market, price is often your best indicator about real estate's direction."

.......http://www.JoeFROCKS.com/ .

..............You Might Want To Get WITM.OB

WITM.OB (WITS BASIN PRECIOUS MINERALS), see http://stockcharts.com/charts/gallery.html?witm, appears to have just entered a Cyclical Bull Market this week on Tuesday 5-20, after falling nearly -90% in the Cyclical Bear Market, putting in a bullish slightly lower double bottom cycle low at 0.145 on 5-20 versus 0.150 in November 2007.

WITM.OB needs to clearly break (5% follow through major buy signal) the Cyclical Bear Market downtrend line (connected to recent cycle high at 0.33) before Trade the Cycles will indicate that it very likely entered a Cyclical Bull Market this week/on 5-20.

I personally will wait for WITM.OB to clearly hit a major buy signal on strong volume before thinking about trading it long, given how bearish the gold sector is likely to be for a while, see http://tradethecycles.blogspot.com/2008/05/latest-gold-cot-commitments-of-traders.html.

Also, WITM.OB apparently has a cash crunch, see http://biz.yahoo.com/e/080521/witm.ob8-k.html, so, maybe one should avoid this stock altogether. Do your due diligence as one should always do.

.......http://www.JoeFROCKS.com/ .

......."Buffett sees "long, deep" U.S. recession"

"Buffett sees "long, deep" U.S. recession," see http://news.yahoo.com/s/nm/20080524/bs_nm/buffett_us_recession_dc.

Part of the article:

"He said the United States was "already in recession" and added: "Perhaps not in the sense that economists would define it" with two consecutive quarters of negative growth.

"But the people are already feeling the effects," said Buffett, the world's richest man. "It will be deeper and last longer than many think.""

This supports the likelihood that HUI/XAU/gold are in an 18+ month Wave 2 Cyclical Bear Market since mid March 2008. The gold sector does well in an inflationary rising interest rate economic upcycle, not the diametric opposite situation that exists now.

After the technology/internet/growth stock/economic bubble burst in March 2000, it was the real estate and consumer binge/boom (from 2002 until early 2006), fueled by rock bottom interest rates and very easy lending practices, that got the US and world out of the 2001 recession.

The problem now is, what major boom gets us out of this huge deflationary mess, brought on by the credit debacle, real estate bust, etc? Where will enough stimulus come from (forget the paltry stimulus checks in the US) to get the world out of this huge bust?

Some sectors, such as solar and wind energy (and other alternative energy sources), are booming, but, right now I don't see enough, or substantial enough in economic impact, booming sectors to make the current US/world recession a relatively brief or mild one.

If Obama or Clinton, if a Democrat gets elected, succeed in raising capital gains and/or income tax rates, that will obviously only exacerbate the deflationary bust. This is a US/world economy that needs all the stimulus it can get.

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI

Wave A Of SPX/NDX/RUT's Wave 4 Monthly Downcycle Probably Didn't Bottom Yet

First, for gold sector and TA/market timing enthusiasts, you have to see how well the latest gold COT data fits the latest analysis, see http://tradethecycles.blogspot.com/2008/05/latest-gold-cot-commitments-of-traders.html.

Note that I did the analysis last night, before the gold COT data was released (today 5-23 at 3:30 EST). This is all I'll post in this update for the gold sector. The NEM Lead Indicator was +0.14% versus the XAU today/on 5-23, -0.23% on 5-22, +0.68% on 5-21, -0.83% on 5-20, -0.21% on 5-19.

Wave A of SPX/NDX/RUT's Wave 4 Monthly Downcycle since 5-19-08 probably didn't bottom yet, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c= and see http://stockcharts.com/charts/gallery.html?%24spx.

SPX (S & P 500) doesn't have a large bullish inverse spike on today 5-23's intraday or daily chart, and, today 5-23's anemic strength (once a session cycle low occurred), in the face of a very bullish short term 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), points to more downside on Tuesday.

However, a very oversold SPX (Williams %R near -100 and RSI is oversold) points to a significant bounce (will probably enter Wave B up of the Wave 4 Monthly Downcycle since 5-19-08 ) at some point on Tuesday.

The WMT Lead Indicator was a bullish +0.78% versus SPX today 5-23 and was a very bullish +1.23% versus SPX yesterday 5-22.

The SPX/NDX/RUT Wave 3 Monthly Upcycle that began on 4-15-08 peaked on 5-19, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c= and see http://stockcharts.com/charts/gallery.html?%24spx. SPX/NDX/RUT all have large bearish spikes on 5-19's candle.

An SPX Wave 2 monthly cycle low occurred on 4-15-08, and, a countertrend Wave B intermediate term upcycle began on 3-17-08 for SPX and NDX (3-10-08 for the Russell 2000 (RUT)). A Wave 1 monthly cycle high occurred on 4-7-08.

Tuesday 5-27 I'll be looking to trade SPX/NDX/RUT ultra long via SSO, QLD, or UWM, and, I might trade WMT long, watching upside gaps at 56.05, 56.40, and, 58.02. SPX has upside gaps at 1394.35 (should get filled in Wave B) and at 1426.63 (probably won't get filled in Wave B) that might get filled in the countertrend Wave B upcycle of the Wave 4 monthly downcycle since 5-19-08.

Once the SPX Wave A move that began on 5-19 bottoms, as it should on Tuesday, there'll be a reference point for trading the Wave C move (Wave 4 monthly cycle low target). Wave C obviously should bottom well below the Wave A cycle low, and, SPX (S & P 500) should fill it's downside gap at 1356.65 in the Wave C move and bottom at 1350-1355 = Wave 4 monthly cycle low target.

Downside gap filling action (1356.65 for SPX, 1917.70, 1881.65, and 1840.88 (likely bullish breakaway gap) for NDX, 692.06 for RUT, 55.15 (filled) and maybe 52.68 for WMT) is expected (normally would occur) in the Wave 4 monthly downcycle.

Since important cycle highs/lows tend to occur shortly after gap filling action is completed, both timewise and pricewise, reasonable Wave 4 monthly cycle low targets are 1350-1355 for SPX, 1875-1880 for NDX, and, 690ish for RUT. WMT has downside gaps at 55.15 (filled) and 52.68.

VIX rose +8.31% today 5-23 versus SPX falling -1.32%, which is an unusually large +6.99% rise in fear (+8.31% + -1.32% = +6.99% rise in the SPX (S & P 500) wall of worry) that points to some significant weakness followed by strength on Tuesday 5-27.

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/very likely began on 10-11-07 for SPX (S & P 500), began in late October 2007 for NDX (NASDAQ 100), and, began in late July 2007 for RUT (Russell 2000).

SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68, 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) 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.

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI

The Latest Gold COT (Commitments Of Traders) Data Confirms My Analysis

The latest gold COT (Commitments Of Traders) data confirms my latest analysis (see http://tradethecycles.blogspot.com/2008/05/gold-etf-gld-analysis.html), see the third/last data at http://www.cftc.gov/dea/options/deacmxsof.htm, since the savvy non contrarian gold Commercial Traders added a massive 32,117 short gold futures and options contracts in the five day period ending 5-20-08, while the clueless contrarian gold Speculators added a very large 19,203 long gold futures and options contracts in the five day period ending 5-20-08.

Note also that the overall position of the savvy non contrarian gold Commercial Traders is massively net short, while the overall position of the clueless contrarian gold Speculators (includes some gold "gurus") is massively net long.

There should be many great GDX/GLD/NEM shorting opportunities in the next few days, weeks, months, and, probably the next 18+ months (from 3-17-08) in the likely Wave 2 Cyclical Bear Market for GDX/HUI/XAU/GLD.

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI

.....................Gold ETF (GLD) Analysis

GLD put in a likely Wave 1 Cyclical Bull Market cycle high at 100.44 on 3-17-08, see http://stockcharts.com/charts/gallery.html?gld. The cycle low at 83.57 on 5-1-08 was probably a Wave A minor intermediate term cycle low, meaning that it's probably Wave A down of a Wave A major intermediate term downcycle, which is Wave A down of the Wave 2 Cyclical Bear Market.

The monthly upcycle from 5-1-08 to yesterday 5-21-08 is probably the countertrend Wave B upcycle of the Wave A major intermediate term downcycle, which means that GLD is probably in a Wave C minor intermediate term downcycle now/since yesterday 5-21's cycle high (entered Wave C of the Wave A major intermediate term downcycle yesterday 5-21).

Here's more bad news that supports the above Elliott Wave count discussion: GLD's monthly upcycle from 5-1-08 to yesterday 5-21-08 (probably the countertrend Wave B upcycle of a Wave A major intermediate term downcycle) has a failed Elliott Wave 12345 up down up down up pattern, with Wave 4 bottoming below Wave 2 (which is obviously very bearish), see http://stockcharts.com/charts/gallery.html?gld, which obviously supports the likely scenario that GLD is in a Wave A major intermediate term downcycle of a Wave 2 Cyclical Bear Market.

Also, the lowest consumer confidence in 28 years (since June 1980, when gold approached $500 after hitting the $875ish Secular Bull Market cycle high a few months before, see http://www.chartsrus.com/chart.php?image=http://www.sharelynx.com/chartsfixed/GC1982btm.gif), the severe real estate bust, tight mortgage lending environment and getting tighter, credit crisis (credit/debt instrument and financial stocks implosion), stock market bear market, etc are all obviously very deflationary.

.......http://www.JoeFROCKS.com/ .

NEM XAU HUI