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/ .

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