SPX (S & P 500) Took Out The 6-12 Cycle Low Today
SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) took out the 6-12 cycle low at 1331.29 today, with today's cycle low at 1330.50, 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, the short term Walmart (WMT) Lead Indicator got more bearish today, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=l&p=&a=p12,fs,w14&c=wmt,%5EGSPC (WMT Lead Indicator was -0.34% versus SPX today/on 6-19, -0.77% on 6-18, -0.37% on 6-17, +0.21% on 6-16, -1.39% on 6-13).
An SPX (S & P 500) Wave 2 minor intermediate term downcycle (since 5-19-08) remains in effect, see http://stockcharts.com/charts/gallery.html?%24spx, and, the short term Walmart (WMT) Lead Indicator has turned very bearish, 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 (S & P 500) created a bullish breakaway gap at 1322.70 on 4-1 that should get filled in this Wave 2 minor intermediate term downcycle (since 5-19-08), and, WMT created one at 52.68. 1320ish might be a good Wave 2 cycle low target for SPX, because of the downside gap at 1322.70.
Note that WMT has a very large bearish spike on yesterday 6-18's daily candle, see http://stockcharts.com/charts/gallery.html?wmt, and, has a very large bearish spike on on 6-18's intraday candle, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.
Walmart (WMT) filled downside gaps at 58.37 and 57.68 yesterday. Watch downside gaps at 57.20, 56.40, 55.75 tomorrow.
I'll be looking to ultra short SPX/NDX/RUT via SDS/QID/TWM tomorrow, or, I might short WMT. I also might short NEM or GDX or GLD. I traded QID today, with an entry point at 38.74 and an exit point at 39.07.
Reliable lead indicator Walmart (WMT) put in a monthly cycle high at 59.95 on Tuesday 6-10, see http://stockcharts.com/charts/gallery.html?wmt. StockCharts labeled it a cycle high, which was another successful test of their approach.
Reliable lead indicator Walmart (WMT) filled it's downside gap at 58.52 on 6-16, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=. Watch 57.20 on Friday, and, WMT has more downside gaps at 56.40, 55.75, and 52.68, 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=.
Once SPX puts in a Wave 2 minor intermediate term cycle low watch upside gaps at 1350.93, 1404.05, 1426.63, 1447.16, 1467.95, 1488.41, and, there are probably additional upside gaps I need to identify.
VIX fell a sharp -2.97% today 6-19 versus SPX rising a modest +0.38%, which is a sharp +2.59% rise in complacency (-2.97% + +0.38% = -2.59% decline in the SPX (S & P 500) wall of worry) that points to some severe weakness early on Friday 6-20.
The SPX/NDX/RUT Wave 3 monthly upcycle that began on 4-15-08 peaked in early May, and, the Wave 1 minor intermediate term upcycle peaked on 5-19-08, see http://stockcharts.com/charts/gallery.html?%24spx. Note the large bearish spike 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 (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 (S & P 500) 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.
GNOLF.OB didn't hit a 5% follow through major buy signal on 6-16, because, it spiked at the open and trended down, see http://finance.yahoo.com/q/ta?s=gnolf.ob&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, and, see http://stockcharts.com/charts/gallery.html?gnolf. If GNOLF.OB had trended up for a few hours yesterday it probably would have hit a 5% follow through major buy signal.
That being said, GNOLF.OB appears to have entered a Cyclical Bull Market in early June, note the huge very bullish inverse spike, after being in a Cyclical Bear Market (did an Elliott Wave ABC down up down pattern, see chart two at http://stockcharts.com/charts/gallery.html?gnolf) for over two years. Volume has exploded recently, which is obviously a good sign.
GNOLF.OB put in a short term Wave 1 cycle high on 6-16 at 0.478, note the large bearish spike on 6-16's candle, see http://stockcharts.com/charts/gallery.html?gnolf. I'll look to go long once GNOLF.OB completes a short term Wave 2 downcycle in the next few days.
GDX/HUI/XAU/GLD/NEM's action since Monday 6-16's large gap up continued to be bearish today, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, because, they've spent little time trending up.
It looks like they'll try to fill Monday's downside gap in the next few days. The NEM Lead Indicator was a bullish +0.74% versus the XAU today/on 6-19, so, not surprisingly, a rebound is likely early tomorrow, after today's intraday plunge.
The XAU (and HUI) has a large bearish spike on today 6-19's bearish black (indicates a close below the open) candle, see http://stockcharts.com/charts/gallery.html?%24xau.
GDX/HUI/XAU/GLD made large bullish breakaway gaps at 43.15, 398.32, 175.46, 85.83 at 6-16's open, and, filled 6-12's bearish upside breakaway gaps at 44.11, 406.61, 177.58, 87.02, and 47.20 on 6-15, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.
GDX/HUI/XAU/GLD are in Wave C of Wave A of the Wave C minor intermediate term downcycle since 5-21-08, see http://stockcharts.com/charts/gallery.html?gdx, and, they created large bearish breakaway type gaps at 6-10's open (and 6-12's discussed earlier) at 46.65, 433.01, 185.15, and 87.99 (filled), see GDX at http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. NEM created a large bearish breakaway type gap at 6-10's open at 49.02 (filled 6-19).
Watch GDX's downside gaps at 44.49 (filled 6-5), 44.10 (filled 6-10), 43.18 (filled ), and 42.65. Watch NEM's downside gaps at 45.10 from 5-15, and, at 42.29, 41.52.
HUI/XAU put in an intermediate term and very likely 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.
GDX/HUI/XAU/GLD (http://stockcharts.com/charts/gallery.html?gdx) entered the Wave C downcycle of Wave A of Wave C (since 5-21-08) of the Wave A major intermediate term downcycle since mid March 2008, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.
The NEM Lead Indicator was a bullish +0.74% versus the XAU today/on 6-19, was a slightly bullish +0.15% versus the XAU on 6-18, was a slightly bearish -0.18% versus the XAU on 6-17, was a very bullish +1.05% versus the XAU on 6-16, was a bearish -0.49% on 6-13, was a very bullish +1.26% on 6-12, was a bullish +0.64% on 6-11, was -0.22% on 6-10, was +0.66% on 6-9, was -0.85% on 6-6, was a bordering on very bearish -0.98% on 6-5, was a very bullish +1.61% on 6-4, was +0.25% on 6-3, +0.33% on 6-2.
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 47.75, 91.23, 48.74 (filled), 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 recently, confirming the bearish case, see http://stockcharts.com/charts/gallery.html?gld, and, it created additional big bearish breakaway gaps at 91.23 on 5-27, at 89.14 (filled) on 5-29, at 87.96 (filled) on 6-3, at 87.99 on 6-10 (filled), and, at 87.02 (filled) on 6-12. Therefore, GLD has two very large very bearish breakaway gaps now, at 92.56, 91.23.
I hope you realize that "Deflation Is Everywhere!," see http://tradethecycles.blogspot.com/2008/05/deflation-is-everywhere.html.
NEM is probably in Wave 2 down of a monthly upcycle, see http://stockcharts.com/charts/gallery.html?nem. NEM created large bullish breakaway gaps at 45.10 on 5-15 and 47.90 on 6-6 (filled 6-10), 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.
NEM has remaining downside gaps at 45.10, 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.
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.
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 ten 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 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?
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://wwwJoeFRocks.com/ .
NEM XAU HUI
An SPX (S & P 500) Wave 2 minor intermediate term downcycle (since 5-19-08) remains in effect, see http://stockcharts.com/charts/gallery.html?%24spx, and, the short term Walmart (WMT) Lead Indicator has turned very bearish, 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 (S & P 500) created a bullish breakaway gap at 1322.70 on 4-1 that should get filled in this Wave 2 minor intermediate term downcycle (since 5-19-08), and, WMT created one at 52.68. 1320ish might be a good Wave 2 cycle low target for SPX, because of the downside gap at 1322.70.
Note that WMT has a very large bearish spike on yesterday 6-18's daily candle, see http://stockcharts.com/charts/gallery.html?wmt, and, has a very large bearish spike on on 6-18's intraday candle, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.
Walmart (WMT) filled downside gaps at 58.37 and 57.68 yesterday. Watch downside gaps at 57.20, 56.40, 55.75 tomorrow.
I'll be looking to ultra short SPX/NDX/RUT via SDS/QID/TWM tomorrow, or, I might short WMT. I also might short NEM or GDX or GLD. I traded QID today, with an entry point at 38.74 and an exit point at 39.07.
Reliable lead indicator Walmart (WMT) put in a monthly cycle high at 59.95 on Tuesday 6-10, see http://stockcharts.com/charts/gallery.html?wmt. StockCharts labeled it a cycle high, which was another successful test of their approach.
Reliable lead indicator Walmart (WMT) filled it's downside gap at 58.52 on 6-16, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=. Watch 57.20 on Friday, and, WMT has more downside gaps at 56.40, 55.75, and 52.68, 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=.
Once SPX puts in a Wave 2 minor intermediate term cycle low watch upside gaps at 1350.93, 1404.05, 1426.63, 1447.16, 1467.95, 1488.41, and, there are probably additional upside gaps I need to identify.
VIX fell a sharp -2.97% today 6-19 versus SPX rising a modest +0.38%, which is a sharp +2.59% rise in complacency (-2.97% + +0.38% = -2.59% decline in the SPX (S & P 500) wall of worry) that points to some severe weakness early on Friday 6-20.
The SPX/NDX/RUT Wave 3 monthly upcycle that began on 4-15-08 peaked in early May, and, the Wave 1 minor intermediate term upcycle peaked on 5-19-08, see http://stockcharts.com/charts/gallery.html?%24spx. Note the large bearish spike 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 (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 (S & P 500) 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.
GNOLF.OB didn't hit a 5% follow through major buy signal on 6-16, because, it spiked at the open and trended down, see http://finance.yahoo.com/q/ta?s=gnolf.ob&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, and, see http://stockcharts.com/charts/gallery.html?gnolf. If GNOLF.OB had trended up for a few hours yesterday it probably would have hit a 5% follow through major buy signal.
That being said, GNOLF.OB appears to have entered a Cyclical Bull Market in early June, note the huge very bullish inverse spike, after being in a Cyclical Bear Market (did an Elliott Wave ABC down up down pattern, see chart two at http://stockcharts.com/charts/gallery.html?gnolf) for over two years. Volume has exploded recently, which is obviously a good sign.
GNOLF.OB put in a short term Wave 1 cycle high on 6-16 at 0.478, note the large bearish spike on 6-16's candle, see http://stockcharts.com/charts/gallery.html?gnolf. I'll look to go long once GNOLF.OB completes a short term Wave 2 downcycle in the next few days.
GDX/HUI/XAU/GLD/NEM's action since Monday 6-16's large gap up continued to be bearish today, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, because, they've spent little time trending up.
It looks like they'll try to fill Monday's downside gap in the next few days. The NEM Lead Indicator was a bullish +0.74% versus the XAU today/on 6-19, so, not surprisingly, a rebound is likely early tomorrow, after today's intraday plunge.
The XAU (and HUI) has a large bearish spike on today 6-19's bearish black (indicates a close below the open) candle, see http://stockcharts.com/charts/gallery.html?%24xau.
GDX/HUI/XAU/GLD made large bullish breakaway gaps at 43.15, 398.32, 175.46, 85.83 at 6-16's open, and, filled 6-12's bearish upside breakaway gaps at 44.11, 406.61, 177.58, 87.02, and 47.20 on 6-15, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.
GDX/HUI/XAU/GLD are in Wave C of Wave A of the Wave C minor intermediate term downcycle since 5-21-08, see http://stockcharts.com/charts/gallery.html?gdx, and, they created large bearish breakaway type gaps at 6-10's open (and 6-12's discussed earlier) at 46.65, 433.01, 185.15, and 87.99 (filled), see GDX at http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. NEM created a large bearish breakaway type gap at 6-10's open at 49.02 (filled 6-19).
Watch GDX's downside gaps at 44.49 (filled 6-5), 44.10 (filled 6-10), 43.18 (filled ), and 42.65. Watch NEM's downside gaps at 45.10 from 5-15, and, at 42.29, 41.52.
HUI/XAU put in an intermediate term and very likely 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.
GDX/HUI/XAU/GLD (http://stockcharts.com/charts/gallery.html?gdx) entered the Wave C downcycle of Wave A of Wave C (since 5-21-08) of the Wave A major intermediate term downcycle since mid March 2008, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.
The NEM Lead Indicator was a bullish +0.74% versus the XAU today/on 6-19, was a slightly bullish +0.15% versus the XAU on 6-18, was a slightly bearish -0.18% versus the XAU on 6-17, was a very bullish +1.05% versus the XAU on 6-16, was a bearish -0.49% on 6-13, was a very bullish +1.26% on 6-12, was a bullish +0.64% on 6-11, was -0.22% on 6-10, was +0.66% on 6-9, was -0.85% on 6-6, was a bordering on very bearish -0.98% on 6-5, was a very bullish +1.61% on 6-4, was +0.25% on 6-3, +0.33% on 6-2.
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 47.75, 91.23, 48.74 (filled), 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 recently, confirming the bearish case, see http://stockcharts.com/charts/gallery.html?gld, and, it created additional big bearish breakaway gaps at 91.23 on 5-27, at 89.14 (filled) on 5-29, at 87.96 (filled) on 6-3, at 87.99 on 6-10 (filled), and, at 87.02 (filled) on 6-12. Therefore, GLD has two very large very bearish breakaway gaps now, at 92.56, 91.23.
I hope you realize that "Deflation Is Everywhere!," see http://tradethecycles.blogspot.com/2008/05/deflation-is-everywhere.html.
NEM is probably in Wave 2 down of a monthly upcycle, see http://stockcharts.com/charts/gallery.html?nem. NEM created large bullish breakaway gaps at 45.10 on 5-15 and 47.90 on 6-6 (filled 6-10), 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.
NEM has remaining downside gaps at 45.10, 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.
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.
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 ten 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 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?
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://wwwJoeFRocks.com/ .
NEM XAU HUI
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
2:05 PM
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