SPX's (S & P 500) Countertrend Wave B Upcycle Of The Wave 4 Monthly Downcycle Since 5-19-08 Peaked Late Thursday 5-29
SPX's (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) countertrend Wave B upcycle of the Wave 4 Monthly Downcycle since 5-19-08 peaked late Thursday 5-29, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c.
NDX's (NASDAQ 100, http://stockcharts.com/charts/gallery.html?%24ndx) countertrend Wave B upcycle of the Wave 4 Monthly Downcycle since 5-19-08 peaked late Friday 5-30, see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=on&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.
RUT's (Russell 2000, http://stockcharts.com/charts/gallery.html?%24rut) Wave 3 monthly upcycle since 4-15-08 peaked in rollover mode on 5-29 versus the 5-19 cycle high, see http://stockcharts.com/charts/gallery.html?%24spx, and, see http://finance.yahoo.com/q/ta?s=%5Erut&t=5d&l=on&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, so, RUT probably completed Wave A of Wave A down of the Wave 4 monthly downcycle today, and, ended the session in the countertrend Wave B up.
SPX/NDX/RUT should complete the countertrend Wave B move (began at mid session today 6-2) early tomorrow 6-3, and, I'll be looking to "ultra" short SPX/NDX/RUT via SDS, QID, and TWM. The WMT Lead Indicator should turn bearish again early tomorrow 6-3. It was a slightly bullish +0.11% versus SPX today 6-2.
SPX should fill it's downside gap at 1356.65 and put in a Wave 4 monthly cycle low at 1350-1355 tomorrow 6-3 or on 6-4, versus the short term Wave A cycle low at 1373.07. NDX should bottom well below the short term Wave A cycle low at 1963.05, and, put in a Wave 4 monthly cycle low at 1910-1915 tomorrow 6-3 or on 6-4, shortly after filling the downside gap at 1917.70. Watch NDX's downside gaps at 1917.70 (in case it doesn't get filled), 1881.65, and 1840.88 just in case.
RUT will probably fill it's downside gap at 692.06 in Wave C of the Wave 4 monthly downcycle, but, for the next few days watch today's Wave A of Wave A cycle low at 733.67 and look for RUT to bottom at 720-725 in Wave A down of the Wave 4 monthly downcycle since 5-29.
The WMT Lead Indicator was +0.11% versus SPX today 6-2, was -0.50% versus SPX on 5-30, was +0.96% 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 rose +11.22% today 6-2 versus SPX falling -1.05%, which is an unusually large +10.17% rise in fear (+11.22% + -1.05% = +10.17% rise in the SPX (S & P 500) wall of worry) that points to some significant/probably severe weakness on Tuesday 6-3 followed possibly by strength (strength might not begin until Wednesday).
The SPX/NDX Wave 3 Monthly Upcycle that began on 4-15-08 peaked on 5-19 (RUT peaked on 5-29 in rollover mode), 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 that didn't 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.
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 5-29's big bearish breakaway upside gaps today 6-2 and only NEM succeeded, 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 will probably try to but probably won't (as discussed below) fill 5-30's downside gaps tomorrow Tuesday 6-3.
Reliable lead indicator NEM appears to have put in a short term Wave A cycle low on 5-29 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 (it appears, but, I haven't closely tracked it) 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 on 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. I tried today 6-3 and it doesn't look like the approach is discussed. There's some info at this link, see http://stockcharts.com/commentary/mailbag/mailbag20000614.html.
HUI, XAU, and GLD are also labeled as having put in a short term Wave A cycle low on 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 on 5-30 has a bullish medium inverse spike, see http://stockcharts.com/charts/gallery.html?nem.
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 recently, 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 probably began on 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 modestly bullish +0.33% versus the XAU today 6-2, was a bearish -0.65% versus the XAU on 5-30, was a very bullish +1.11% 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
NDX's (NASDAQ 100, http://stockcharts.com/charts/gallery.html?%24ndx) countertrend Wave B upcycle of the Wave 4 Monthly Downcycle since 5-19-08 peaked late Friday 5-30, see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=on&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.
RUT's (Russell 2000, http://stockcharts.com/charts/gallery.html?%24rut) Wave 3 monthly upcycle since 4-15-08 peaked in rollover mode on 5-29 versus the 5-19 cycle high, see http://stockcharts.com/charts/gallery.html?%24spx, and, see http://finance.yahoo.com/q/ta?s=%5Erut&t=5d&l=on&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, so, RUT probably completed Wave A of Wave A down of the Wave 4 monthly downcycle today, and, ended the session in the countertrend Wave B up.
SPX/NDX/RUT should complete the countertrend Wave B move (began at mid session today 6-2) early tomorrow 6-3, and, I'll be looking to "ultra" short SPX/NDX/RUT via SDS, QID, and TWM. The WMT Lead Indicator should turn bearish again early tomorrow 6-3. It was a slightly bullish +0.11% versus SPX today 6-2.
SPX should fill it's downside gap at 1356.65 and put in a Wave 4 monthly cycle low at 1350-1355 tomorrow 6-3 or on 6-4, versus the short term Wave A cycle low at 1373.07. NDX should bottom well below the short term Wave A cycle low at 1963.05, and, put in a Wave 4 monthly cycle low at 1910-1915 tomorrow 6-3 or on 6-4, shortly after filling the downside gap at 1917.70. Watch NDX's downside gaps at 1917.70 (in case it doesn't get filled), 1881.65, and 1840.88 just in case.
RUT will probably fill it's downside gap at 692.06 in Wave C of the Wave 4 monthly downcycle, but, for the next few days watch today's Wave A of Wave A cycle low at 733.67 and look for RUT to bottom at 720-725 in Wave A down of the Wave 4 monthly downcycle since 5-29.
The WMT Lead Indicator was +0.11% versus SPX today 6-2, was -0.50% versus SPX on 5-30, was +0.96% 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 rose +11.22% today 6-2 versus SPX falling -1.05%, which is an unusually large +10.17% rise in fear (+11.22% + -1.05% = +10.17% rise in the SPX (S & P 500) wall of worry) that points to some significant/probably severe weakness on Tuesday 6-3 followed possibly by strength (strength might not begin until Wednesday).
The SPX/NDX Wave 3 Monthly Upcycle that began on 4-15-08 peaked on 5-19 (RUT peaked on 5-29 in rollover mode), 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 that didn't 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.
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 5-29's big bearish breakaway upside gaps today 6-2 and only NEM succeeded, 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 will probably try to but probably won't (as discussed below) fill 5-30's downside gaps tomorrow Tuesday 6-3.
Reliable lead indicator NEM appears to have put in a short term Wave A cycle low on 5-29 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 (it appears, but, I haven't closely tracked it) 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 on 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. I tried today 6-3 and it doesn't look like the approach is discussed. There's some info at this link, see http://stockcharts.com/commentary/mailbag/mailbag20000614.html.
HUI, XAU, and GLD are also labeled as having put in a short term Wave A cycle low on 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 on 5-30 has a bullish medium inverse spike, see http://stockcharts.com/charts/gallery.html?nem.
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 recently, 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 probably began on 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 modestly bullish +0.33% versus the XAU today 6-2, was a bearish -0.65% versus the XAU on 5-30, was a very bullish +1.11% 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
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
2:14 PM
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