SPX's (S & P 500) Wave 4 Monthly Downcycle Is Trying To Bottom
SPX's (S & P 500) Wave 4 monthly downcycle since 5-19-08 is trying to bottom, 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's technical indicators, such as RSI, stochastics, and Williams %R, are extremely oversold, the WMT (Walmart) Lead Indicator is extremely bullish, 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, the Elliott Wave count, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html, all jive with a Wave 4 monthly cycle low occurring probably early tomorrow 6-12, as does VIX, since VIX rose a very sharp +4.06% today 6-11 versus SPX falling a significant -1.69%, which is a sharp +2.37% rise in fear (+4.06% + -1.69% = +2.37% rise in the SPX (S & P 500) wall of worry) that points to some sharp strength early on Thursday 6-12.
Reliable lead indicator Walmart (WMT) might fill Monday's downside gap at 58.37 early tomorrow, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, then, it'll probably try to fill today 6-11's upside gap at 59.78, which obviously jives with SPX bottoming and entering a Wave 5 monthly upcycle tomorrow 6-12.
WMT has another downside gap at 57.68 from Thursday 6-5's open, that appears to be a bullish breakaway gap, 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=. Additional downside gaps are at 57.20, 56.40, 55.75, and 52.68.
As long as SPX's (S & P 500) Wave 4 bottoms above Wave 2 I'll stick with the current Elliott Wave count. If this cycle low takes out Wave 2's that occurred on 4-15-08, see http://stockcharts.com/charts/gallery.html?%24spx, I'll have to rethink the Elliott Wave count and therefore also SPX's intermediate term upcycle picture.
The fact that Wave 4 will only bottom modestly above Wave 2 is obviously a bearish sign, and, jives with SPX being in a Cyclical Bear Market since 10-11-07.
NDX (NASDAQ 100, http://stockcharts.com/charts/gallery.html?%24ndx) is also putting in a Wave 4 monthly cycle low, while RUT (Russell 2000, http://stockcharts.com/charts/gallery.html?%24rut) appears to be doing Wave A down of a Wave 4? monthly downcycle, but, I need to take a good look at RUT.
Once SPX puts in a Wave 4 monthly cycle low watch upside gaps at
1358.44, 1404.05, 1426.63, 1447.16, 1467.95, 1488.41, and, there are probably additional upside gaps I need to identify.
Tomorrow 6-12 I'll be looking to trade SPX/NDX ultra long via SSO and QLD, once SPX/NDX put in a Wave 4 monthly cycle low.
The short term Walmart (WMT) Lead Indicator is extremely bullish, 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 (-0.42% versus SPX today/on 6-11, +0.59% on 6-10, +1.98% on 6-9, +0.70% on 6-6, +1.73% on 6-5, -0.13% on 6-4, +1.58% on 6-3, +0.11% on 6-2, -0.50% on 5-30, +0.96% on 5-29, +0.82% on 5-28, +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 a very sharp +4.06% today 6-11 versus SPX falling a significant -1.69%, which is a sharp +2.37% rise in fear (+4.06% + -1.69% = +2.37% rise in the SPX (S & P 500) wall of worry) that points to some sharp strength early on Thursday 6-12.
The SPX/NDX/RUT Wave 3 monthly upcycle that began on 4-15-08 peaked on 5-19, see http://stockcharts.com/charts/gallery.html?%24spx. SPX/NDX/RUT 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. A Wave 4 monthly cycle low probably didn't occur on 5-23-08 for NDX and RUT.
Downside gap filling action (1356.65 for SPX) is expected (normally would and did occur on 6-9) 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/GLD/NEM look like they might try to fill yesterday 6-10's large bearish breakaway type gaps tomorrow, since HUI has a bullish short term triple bottom, see http://stockcharts.com/charts/gallery.html?%24HUI, the NEM Lead Indicator has turned bullish, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem, and, NEM's Elliott Wave pattern on the intraday chart points to strength tomorrow 6-12, see http://finance.yahoo.com/q/ta?s=nem&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 at 46.65, 433.01, 185.15, and 87.99, 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.
GLD created a large bullish breakaway gap at 85.55 at today 6-11's open, see http://finance.yahoo.com/q/ta?s=gld&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=.
Watch GDX's downside gaps at 44.49 (filled 6-5), 44.10 (filled 6-10), 43.18, and 42.65. Watch NEM's gap 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 +0.64% versus the XAU today 6-11, was -0.22% on 6-10, was a bullish +0.66% on 6-9, was a bearish -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, was -0.65% 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 +1.56% on 5-16, was -0.27% on 5-15, +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.
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 (filled), 89.14 (filled), 48.22 (filled), and 185.02 (filled) 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.
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, and, at 87.99 on 6-10. Therefore, GLD has three very large very bearish breakaway gaps now, at 92.56, 91.23, and 87.99.
I hope you realize that "Deflation Is Everywhere!," see http://tradethecycles.blogspot.com/2008/05/deflation-is-everywhere.html.
NEM is in Wave C down of a monthly downcycle, 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 45.15, 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.
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 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 (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?
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
SPX's technical indicators, such as RSI, stochastics, and Williams %R, are extremely oversold, the WMT (Walmart) Lead Indicator is extremely bullish, 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, the Elliott Wave count, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html, all jive with a Wave 4 monthly cycle low occurring probably early tomorrow 6-12, as does VIX, since VIX rose a very sharp +4.06% today 6-11 versus SPX falling a significant -1.69%, which is a sharp +2.37% rise in fear (+4.06% + -1.69% = +2.37% rise in the SPX (S & P 500) wall of worry) that points to some sharp strength early on Thursday 6-12.
Reliable lead indicator Walmart (WMT) might fill Monday's downside gap at 58.37 early tomorrow, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, then, it'll probably try to fill today 6-11's upside gap at 59.78, which obviously jives with SPX bottoming and entering a Wave 5 monthly upcycle tomorrow 6-12.
WMT has another downside gap at 57.68 from Thursday 6-5's open, that appears to be a bullish breakaway gap, 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=. Additional downside gaps are at 57.20, 56.40, 55.75, and 52.68.
As long as SPX's (S & P 500) Wave 4 bottoms above Wave 2 I'll stick with the current Elliott Wave count. If this cycle low takes out Wave 2's that occurred on 4-15-08, see http://stockcharts.com/charts/gallery.html?%24spx, I'll have to rethink the Elliott Wave count and therefore also SPX's intermediate term upcycle picture.
The fact that Wave 4 will only bottom modestly above Wave 2 is obviously a bearish sign, and, jives with SPX being in a Cyclical Bear Market since 10-11-07.
NDX (NASDAQ 100, http://stockcharts.com/charts/gallery.html?%24ndx) is also putting in a Wave 4 monthly cycle low, while RUT (Russell 2000, http://stockcharts.com/charts/gallery.html?%24rut) appears to be doing Wave A down of a Wave 4? monthly downcycle, but, I need to take a good look at RUT.
Once SPX puts in a Wave 4 monthly cycle low watch upside gaps at
1358.44, 1404.05, 1426.63, 1447.16, 1467.95, 1488.41, and, there are probably additional upside gaps I need to identify.
Tomorrow 6-12 I'll be looking to trade SPX/NDX ultra long via SSO and QLD, once SPX/NDX put in a Wave 4 monthly cycle low.
The short term Walmart (WMT) Lead Indicator is extremely bullish, 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 (-0.42% versus SPX today/on 6-11, +0.59% on 6-10, +1.98% on 6-9, +0.70% on 6-6, +1.73% on 6-5, -0.13% on 6-4, +1.58% on 6-3, +0.11% on 6-2, -0.50% on 5-30, +0.96% on 5-29, +0.82% on 5-28, +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 a very sharp +4.06% today 6-11 versus SPX falling a significant -1.69%, which is a sharp +2.37% rise in fear (+4.06% + -1.69% = +2.37% rise in the SPX (S & P 500) wall of worry) that points to some sharp strength early on Thursday 6-12.
The SPX/NDX/RUT Wave 3 monthly upcycle that began on 4-15-08 peaked on 5-19, see http://stockcharts.com/charts/gallery.html?%24spx. SPX/NDX/RUT 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. A Wave 4 monthly cycle low probably didn't occur on 5-23-08 for NDX and RUT.
Downside gap filling action (1356.65 for SPX) is expected (normally would and did occur on 6-9) 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/GLD/NEM look like they might try to fill yesterday 6-10's large bearish breakaway type gaps tomorrow, since HUI has a bullish short term triple bottom, see http://stockcharts.com/charts/gallery.html?%24HUI, the NEM Lead Indicator has turned bullish, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem, and, NEM's Elliott Wave pattern on the intraday chart points to strength tomorrow 6-12, see http://finance.yahoo.com/q/ta?s=nem&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 at 46.65, 433.01, 185.15, and 87.99, 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.
GLD created a large bullish breakaway gap at 85.55 at today 6-11's open, see http://finance.yahoo.com/q/ta?s=gld&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=.
Watch GDX's downside gaps at 44.49 (filled 6-5), 44.10 (filled 6-10), 43.18, and 42.65. Watch NEM's gap 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 +0.64% versus the XAU today 6-11, was -0.22% on 6-10, was a bullish +0.66% on 6-9, was a bearish -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, was -0.65% 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 +1.56% on 5-16, was -0.27% on 5-15, +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.
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 (filled), 89.14 (filled), 48.22 (filled), and 185.02 (filled) 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.
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, and, at 87.99 on 6-10. Therefore, GLD has three very large very bearish breakaway gaps now, at 92.56, 91.23, and 87.99.
I hope you realize that "Deflation Is Everywhere!," see http://tradethecycles.blogspot.com/2008/05/deflation-is-everywhere.html.
NEM is in Wave C down of a monthly downcycle, 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 45.15, 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.
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 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 (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?
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
2:12 PM
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