An Anemic SPX (S & P 500) Monthly Upcycle Might Have Peaked On 5-2
An anemic SPX (S & P 500) monthly upcycle (began 4-15-08) might have peaked on Friday 5-2, see the daily candlestick chart at http://stockcharts.com/charts/gallery.html?%24spx, and, see the 5 day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=on&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=.
Reliable lead indicator Walmart (WMT) appears to have put in a monthly cycle high at 59.09 (near perfect slightly higher bearish double top with 4-30's cycle high) on 5-1, leading SPX by a session, see http://stockcharts.com/charts/gallery.html?wmt. WMT's monthly upcycle trendline has broken down.
WMT created a bearish breakaway upside gap at 57.50 today 5-5, and, created a number of large bearish spikes on the intraday candlestick chart near session's end, see http://finance.yahoo.com/q/ta?s=WMT&t=1d&l=on&z=l&q=c&p=&a=p12,fs,w14&c.
Watch SPX, NDX, RUT, WMT downside gaps at 1365.56, 1881.65, 692.06, and 55.15 this week.
I'll be looking to trade SPX, NDX, or RUT ultra short early on Tuesday 5-6 via SDS, QID, or TWM.
The WMT Lead Indicator was a bearish -0.47% versus SPX today 5-5, was a very bearish -1.30% versus SPX on 5-2, was a very bearish -1.55% on 5-1, was a bearish -0.69% on 4-30, was an extremely bullish +2.59% on 4-29, was a modestly bearish -0.41% on 4-28 and a modestly bearish -0.30% on 4-25 (+0.29% on 4-24, +0.36% on 4-23, +1.18% on 4-22, +0.28% on 4-21, -0.85% on 4-16, +1.57% on 4-15, +0.98% on 4-14, +2.30% on 4-11, +0.51% on 4-10, +0.24% on 4-9, +0.92% on 4-8).
VIX rose +3.96% today 5-5 versus SPX falling -0.45%, which is a very sharp +3.51% rise in fear (+3.96% + -0.45% = +3.51% rise in the SPX (S & P 500) wall of worry) that points to some sharp strength on Tuesday 5-6.
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.
HUI/XAU probably put in a Wave A intermediate term cycle low on 5-1, of the likely Wave 2 Cyclical Bear Market since 3-14-08 for the XAU and since 3-17-08 for HUI, see http://stockcharts.com/charts/gallery.html?%24xau. HUI/XAU have Elliott Wave ABC down up down patterns from 3-17-08/3-14-08 to 5-1-08, HUI/XAU/NEM have bullish large inverse spikes on 5-1's candle, reliable lead indicator NEM didn't fill it's downside gap at 42.29 on 5-1, it missed by 7 cents, and, the XAU didn't fill it's downside gap at 161.75 on 5-1, it's cycle low was 162.88. Also, the NEM Lead Indicator has turned very bullish lately, at -1.33% versus the XAU today/on 5-5, at +1.30% versus the XAU on 5-2, at +0.67% versus the XAU on 5-1, +0.16% on 4-30, +2.06% on 4-29, -0.35% on 4-28, +2.02% on 4-25, +1.83% on 4-24, +1.67% on 4-23.
Reliable Lead Indicator NEM probably 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 once a 5% follow through major buy signal occurs (after breaking the Wave 2 major intermediate term downcycle trendline), but, waiting for a sharp pullback makes sense if one's looking to go long. 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.
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.
Concerning HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal six 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
Reliable lead indicator Walmart (WMT) appears to have put in a monthly cycle high at 59.09 (near perfect slightly higher bearish double top with 4-30's cycle high) on 5-1, leading SPX by a session, see http://stockcharts.com/charts/gallery.html?wmt. WMT's monthly upcycle trendline has broken down.
WMT created a bearish breakaway upside gap at 57.50 today 5-5, and, created a number of large bearish spikes on the intraday candlestick chart near session's end, see http://finance.yahoo.com/q/ta?s=WMT&t=1d&l=on&z=l&q=c&p=&a=p12,fs,w14&c.
Watch SPX, NDX, RUT, WMT downside gaps at 1365.56, 1881.65, 692.06, and 55.15 this week.
I'll be looking to trade SPX, NDX, or RUT ultra short early on Tuesday 5-6 via SDS, QID, or TWM.
The WMT Lead Indicator was a bearish -0.47% versus SPX today 5-5, was a very bearish -1.30% versus SPX on 5-2, was a very bearish -1.55% on 5-1, was a bearish -0.69% on 4-30, was an extremely bullish +2.59% on 4-29, was a modestly bearish -0.41% on 4-28 and a modestly bearish -0.30% on 4-25 (+0.29% on 4-24, +0.36% on 4-23, +1.18% on 4-22, +0.28% on 4-21, -0.85% on 4-16, +1.57% on 4-15, +0.98% on 4-14, +2.30% on 4-11, +0.51% on 4-10, +0.24% on 4-9, +0.92% on 4-8).
VIX rose +3.96% today 5-5 versus SPX falling -0.45%, which is a very sharp +3.51% rise in fear (+3.96% + -0.45% = +3.51% rise in the SPX (S & P 500) wall of worry) that points to some sharp strength on Tuesday 5-6.
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.
HUI/XAU probably put in a Wave A intermediate term cycle low on 5-1, of the likely Wave 2 Cyclical Bear Market since 3-14-08 for the XAU and since 3-17-08 for HUI, see http://stockcharts.com/charts/gallery.html?%24xau. HUI/XAU have Elliott Wave ABC down up down patterns from 3-17-08/3-14-08 to 5-1-08, HUI/XAU/NEM have bullish large inverse spikes on 5-1's candle, reliable lead indicator NEM didn't fill it's downside gap at 42.29 on 5-1, it missed by 7 cents, and, the XAU didn't fill it's downside gap at 161.75 on 5-1, it's cycle low was 162.88. Also, the NEM Lead Indicator has turned very bullish lately, at -1.33% versus the XAU today/on 5-5, at +1.30% versus the XAU on 5-2, at +0.67% versus the XAU on 5-1, +0.16% on 4-30, +2.06% on 4-29, -0.35% on 4-28, +2.02% on 4-25, +1.83% on 4-24, +1.67% on 4-23.
Reliable Lead Indicator NEM probably 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 once a 5% follow through major buy signal occurs (after breaking the Wave 2 major intermediate term downcycle trendline), but, waiting for a sharp pullback makes sense if one's looking to go long. 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.
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.
Concerning HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal six 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
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
3:05 PM
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