A Likely SPX (S & P 500) Wave 4 Monthly Cycle Low Occurred On Friday 5-9
A likely SPX (S & P 500) Wave 4 monthly cycle low occurred on Friday 5-9, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c= and see http://stockcharts.com/charts/gallery.html?%24spx.
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 3 monthly cycle high occurred on 5-2-08 and Wave 1 peaked on 4-7-08.
The WMT (Walmart) Lead Indicator turned bearish (gap narrowed dramatically)/became much less bullish late in the session, see (click on 5 day chart after 5-12) http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, and, based on the intraday chart's Elliott Wave count since Friday 5-9's monthly cycle low, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c, the S & P 500 (SPX) is due for some significant weakness early tomorrow after possibly a spike move at the open.
The WMT Lead Indicator has turned very bullish recently, at +0.37% versus SPX today/on 5-12, +0.71% on 5-9, +0.21% on 5-8, +2.66% on 5-7, see the 5 day chart at 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.
WMT created a bullish downside breakaway gap at 57.18 at today 5-12's open, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. Note that WMT put in a large bearish spike near session's end (5-12), so, WMT may try to fill the downside gap at 57.18 in the next day or two, but, it appears to be a bullish breakaway gap, which jives with the very bullish WMT Lead Indicator, discussed in the previous paragraph.
VIX fell -8.35% today 5-12 versus SPX rising +1.10%, which is an unusually large +7.25% rise in complacency (-8.35% + +1.10% = -7.25% decline in the SPX (S & P 500) wall of worry) that points to some significant strength early on Tuesday 5-13 followed by weakness.
Tomorrow I'll be looking to/might short SPX/NDX/RUT via SDS, QID, or TWM, and/or, I'll be looking to short GDX, GLD, or NEM, because, the short term NEM Lead Indicator is very bearish, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem.
Today 5-12 I covered NEM at 44.97 after shorting it at 45.5701 on Friday 5-9. The very bullish WMT Lead Indicator early on today and short term (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) correctly indicated that I should have a quick trigger. NEM didn't fill it's downside gap at 44.51 yet, bottoming at 44.70 today.
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.
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.
The NEM Lead Indicator has turned bearish lately, at -0.65% versus the XAU today 5-12, at -0.32% versus the XAU 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, so, NEM or GDX/GLD are likely to be good shorts on Tuesday, in order to trade the short term Wave 2 downcycle that began on 5-8 for NEM/gold and began on 5-9 for GDX.
NEM has downside gaps at 44.51, 42.29, and 41.52. 45.22 (filled) and 44.51 will probably get filled in the short term Wave 2 downcycle that began on 5-8.
HUI/XAU/GDX have the same short term Elliott Wave count as NEM. GDX has downside gaps at 44.49, 44.10, 43.18, and 42.65.
HUI/XAU put in (5% buy signal occurred on 5-8) 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. Keep in mind that this intermediate term upcycle since 5-1 is probably a countertrend Wave B rebound within a Wave 2 Cyclical Bear Market.
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), but, waiting for a sharp pullback (short term Wave 2 downcycle, currently in effect) 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.
For 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
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 3 monthly cycle high occurred on 5-2-08 and Wave 1 peaked on 4-7-08.
The WMT (Walmart) Lead Indicator turned bearish (gap narrowed dramatically)/became much less bullish late in the session, see (click on 5 day chart after 5-12) http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, and, based on the intraday chart's Elliott Wave count since Friday 5-9's monthly cycle low, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c, the S & P 500 (SPX) is due for some significant weakness early tomorrow after possibly a spike move at the open.
The WMT Lead Indicator has turned very bullish recently, at +0.37% versus SPX today/on 5-12, +0.71% on 5-9, +0.21% on 5-8, +2.66% on 5-7, see the 5 day chart at 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.
WMT created a bullish downside breakaway gap at 57.18 at today 5-12's open, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. Note that WMT put in a large bearish spike near session's end (5-12), so, WMT may try to fill the downside gap at 57.18 in the next day or two, but, it appears to be a bullish breakaway gap, which jives with the very bullish WMT Lead Indicator, discussed in the previous paragraph.
VIX fell -8.35% today 5-12 versus SPX rising +1.10%, which is an unusually large +7.25% rise in complacency (-8.35% + +1.10% = -7.25% decline in the SPX (S & P 500) wall of worry) that points to some significant strength early on Tuesday 5-13 followed by weakness.
Tomorrow I'll be looking to/might short SPX/NDX/RUT via SDS, QID, or TWM, and/or, I'll be looking to short GDX, GLD, or NEM, because, the short term NEM Lead Indicator is very bearish, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem.
Today 5-12 I covered NEM at 44.97 after shorting it at 45.5701 on Friday 5-9. The very bullish WMT Lead Indicator early on today and short term (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) correctly indicated that I should have a quick trigger. NEM didn't fill it's downside gap at 44.51 yet, bottoming at 44.70 today.
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.
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.
The NEM Lead Indicator has turned bearish lately, at -0.65% versus the XAU today 5-12, at -0.32% versus the XAU 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, so, NEM or GDX/GLD are likely to be good shorts on Tuesday, in order to trade the short term Wave 2 downcycle that began on 5-8 for NEM/gold and began on 5-9 for GDX.
NEM has downside gaps at 44.51, 42.29, and 41.52. 45.22 (filled) and 44.51 will probably get filled in the short term Wave 2 downcycle that began on 5-8.
HUI/XAU/GDX have the same short term Elliott Wave count as NEM. GDX has downside gaps at 44.49, 44.10, 43.18, and 42.65.
HUI/XAU put in (5% buy signal occurred on 5-8) 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. Keep in mind that this intermediate term upcycle since 5-1 is probably a countertrend Wave B rebound within a Wave 2 Cyclical Bear Market.
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), but, waiting for a sharp pullback (short term Wave 2 downcycle, currently in effect) 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.
For 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
7:37 PM
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