A GDX/HUI/XAU/GLD Countertrend Wave B Bounce Occurred The Past Two Sessions
GDX/HUI/XAU/GLD experienced a countertrend Wave B bounce the past two sessions, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=. This bounce, that appears to be peaking late today 7-21, is Wave B up of the big short term Wave A downcycle that began early on 7-15-08, see http://stockcharts.com/charts/gallery.html?gdx. So, another crash similar to last week's will probably begin some time during tomorrow 7-22's session.
It looks like GDX/HUI/XAU/GLD will peak early tomorrow, based on today's bullish NEM Lead Indicator, at +0.71% versus the XAU on 7-21, but, the very bearish Walmart (WMT) Lead Indicator, at -1.00% versus the S & P 500 (SPX) today 7-21, suggests that any strength early tomorrow is likely to be short lived.
Also, GDX/HUI/XAU/GLD appear to be in the third/final Wave 5 of the countertrend Wave B bounce that began late last week, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c.
GDX/HUI/XAU/GLD entered Wave C of the Wave A Major Intermediate Term Downcycle (since mid March) very early on 7-15-08, see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c, and, see http://stockcharts.com/charts/gallery.html?gdx.
The NEM Lead Indicator was a bullish +0.71% versus the XAU today/on 7-21, was a bullish +0.62% on 7-18, was a very bearish -1.91% on 7-17, +0.31% on 7-16, +0.52% on 7-15, -1.91% on 7-14, +0.22% on 7-11, +0.65% on 7-10, -0.71% on 7-9, -0.28% on 7-8, -0.85% on 7-7, -0.80% on 7-3, -0.82% on 7-2, +1.15% on 7-1, -1.38% on 6-30, -2.45% on 6-27, -0.95% on 6-26, -0.08% on 6-25.
The savvy non contrarian gold Commercial Traders continue to go massively short!, see the third/last data at http://www.cftc.gov/dea/options/deacmxsof.htm. The 51,879 increase in the short gold futures and options contracts is one of the largest I've ever seen. They also traded aggressively long during the recent countertrend strength, adding 23,089 long gold futures and options contracts in the 5 day period ending 7-15-08.
Note that the savvy US Dollar Commercial Traders traded aggressively net long in the 5 day period ending 7-15-08, see the second from the last data at http://www.cftc.gov/dea/options/deanybtsof.htm.
I'll look to go long DZZ/double short gold (http://finance.yahoo.com/q/ta?s=dzz&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, double short gold ETN) early on Tuesday. The worst thing that happens if I miss another big move is I buy DZZ when it does a short term Wave 2 downcycle.
I shorted GDX (Gold Miners ETF) at 46.3401. NEM might fill downside gaps at 47.54 (filled 7-18) and 47.01, and, GDX might fill downside gaps at 46.67 and 45.36. Then watch downside gaps at 45.10, 42.29 (shouldn't get filled as previously discussed, see the last gold sector paragraph if you're a first time reader), and 41.52 (shouldn't get filled as previously discussed) for NEM, and, at 43.88 and 42.65 for GDX.
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.
In the second set of data at http://www.federalreserve.gov/releases/h6/Current/ in the far right column (not seasonally adjusted data) note that M2 money supply is contracting in recent months. Welcome to deflation and the gold Wave 2 Cyclical Bear Market that began on 3-17-08.
Reliable lead indicator NEM is in Wave C down of a Wave 2 minor intermediate term 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.
GDX, HUI, and GLD created downside gaps at 46.67, 432.61, 93.53 at 7-11's open. The XAU doesn't have one according to Yahoo's data.
GDX/HUI/XAU/GLD created downside gaps at 7-10's open at 46.35, 419.06, 182.27, 91.50. NEM created a downside gap recently at 47.54.
Reliable lead indicator NEM's downside gaps to watch are 49.18 (filled 7-17), 47.54 (filled 7-18), 47.01, 45.10, 42.29, and 41.52. Downside gaps to watch for GLD (Gold ETF) are 93.53, 91.50, 87.42, 85.83, and, 84.58.
Reliable lead indicator NEM put in a Wave 2 major intermediate term cycle low on 5-1 at 42.36 (StockCharts uses slightly different price data ???, for reasons which escape me, there obviously needs to be consistency), see http://stockcharts.com/charts/gallery.html?nem, then, obviously 42.29 and 41.52 shouldn't get filled/should be bullish breakaway gaps. 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.
SPX (S & P 500)/NDX (NASDAQ 100)/RUT (Russell 2000) probably finally bottomed on 7-15, see http://stockcharts.com/charts/gallery.html?%24spx, http://stockcharts.com/charts/gallery.html?%24ndx, and http://stockcharts.com/charts/gallery.html?%24rut. SPX appears to have put in a short term Wave 1 cycle high today 7-21 in rollover mode.
7-15's very bullish candles and the strong short term Wave 1 upcycle suggest that SPX/NDX/RUT probably finally bottomed. RUT's chart is the most bullish, with the largest bullish inverse spike and best chart.
SPX probably put in a Wave A major intermediate term (since 10-11-07) cycle low on 7-15-08, and, NDX/RUT probably put in a Wave 2 minor intermediate term cycle low on 7-15-08, for the countertrend Wave B major intermediate term upcycle since 3-17-08 for NDX and since 3-10-08 for RUT.
So, once NDX (two days into a short term Wave 2 downcycle, see http://stockcharts.com/charts/gallery.html?%24ndx, and, Thursday's bearish breakaway gap makes me cautious about trading NDX long, see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c) and RUT pull back and do a short term Wave 2 downcycle the next few days, I'll look to trade ultra long via QLD and UWM early in a short term Wave 3 upcycle. I might day trade ultra short via SDS, QID, or TWM on Tuesday, once I'm convinced that the short term Wave 1 upcycle has peaked.
The WMT (Walmart) Lead Indicator was a very bearish -1.00% versus SPX (S & P 500) today/on 7-21, was a modestly bullish +0.39% on 7-18, was +0.06% on 7-17, was -0.32% on 7-16, was a bullish +0.97% on 7-15, +0.94% on 7-14, -0.50% on 7-11, was a very bearish -1.50% on 7-10, -0.16% on 7-9, +2.16% on 7-8, +1.39% on 7-7, +0.07% on 7-3, +0.89% on 7-2, +1.10% on 7-1, -0.31% on 6-30, -0.56% on 6-27, +0.72% on 6-26, +0.82% on 6-25, +1.48% on 6-24, +0.67% on 6-23. The more important/longer the cycle is that's bottoming or peaking the longer the lag time tends to be before the indication kicks in, in this case strength (began on 7-15-08).
Trade the Cycles won't indicate that a major cycle low very likely occurred until a 5% follow through major buy signal occurs, but, since a strong short term Wave 1 upcycle occurred, then SPX has probably bottomed (on 7-15-08).
At least waiting for a strong multi day short term Wave 1 upcycle (typically about 2 to 3 sessions, which occurred from 7-15 to 7-18) before looking to trade long overnight, then, one should wait for a pullback/short term Wave 2 downcycle (typically about 1.5 to 3 sessions) before trading long overnight (look to go long early in a short term Wave 3 upcycle, that typically lasts 3 to 5 sessions).
Since SPX (S & P 500) probably bottomed I'll look to trade rockets. It makes a lot of sense to trade with the wind at your back.
Once SPX puts in a Wave A major intermediate term cycle low (probably did on 7-15-08) watch upside gaps at 1321.97, 1342.83, 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 very sharp -4.08% today 7-21 versus SPX falling a slight -0.05%, which is a very sharp +4.13% rise in complacency (-4.08+ -0.05% = -4.13% decline in the SPX (S & P 500) wall of worry) that points to some severe weakness early on Tuesday 7-22.
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).
.......http://www.JoeFRocks.com/
NEM XAU HUI
It looks like GDX/HUI/XAU/GLD will peak early tomorrow, based on today's bullish NEM Lead Indicator, at +0.71% versus the XAU on 7-21, but, the very bearish Walmart (WMT) Lead Indicator, at -1.00% versus the S & P 500 (SPX) today 7-21, suggests that any strength early tomorrow is likely to be short lived.
Also, GDX/HUI/XAU/GLD appear to be in the third/final Wave 5 of the countertrend Wave B bounce that began late last week, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c.
GDX/HUI/XAU/GLD entered Wave C of the Wave A Major Intermediate Term Downcycle (since mid March) very early on 7-15-08, see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c, and, see http://stockcharts.com/charts/gallery.html?gdx.
The NEM Lead Indicator was a bullish +0.71% versus the XAU today/on 7-21, was a bullish +0.62% on 7-18, was a very bearish -1.91% on 7-17, +0.31% on 7-16, +0.52% on 7-15, -1.91% on 7-14, +0.22% on 7-11, +0.65% on 7-10, -0.71% on 7-9, -0.28% on 7-8, -0.85% on 7-7, -0.80% on 7-3, -0.82% on 7-2, +1.15% on 7-1, -1.38% on 6-30, -2.45% on 6-27, -0.95% on 6-26, -0.08% on 6-25.
The savvy non contrarian gold Commercial Traders continue to go massively short!, see the third/last data at http://www.cftc.gov/dea/options/deacmxsof.htm. The 51,879 increase in the short gold futures and options contracts is one of the largest I've ever seen. They also traded aggressively long during the recent countertrend strength, adding 23,089 long gold futures and options contracts in the 5 day period ending 7-15-08.
Note that the savvy US Dollar Commercial Traders traded aggressively net long in the 5 day period ending 7-15-08, see the second from the last data at http://www.cftc.gov/dea/options/deanybtsof.htm.
I'll look to go long DZZ/double short gold (http://finance.yahoo.com/q/ta?s=dzz&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, double short gold ETN) early on Tuesday. The worst thing that happens if I miss another big move is I buy DZZ when it does a short term Wave 2 downcycle.
I shorted GDX (Gold Miners ETF) at 46.3401. NEM might fill downside gaps at 47.54 (filled 7-18) and 47.01, and, GDX might fill downside gaps at 46.67 and 45.36. Then watch downside gaps at 45.10, 42.29 (shouldn't get filled as previously discussed, see the last gold sector paragraph if you're a first time reader), and 41.52 (shouldn't get filled as previously discussed) for NEM, and, at 43.88 and 42.65 for GDX.
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.
In the second set of data at http://www.federalreserve.gov/releases/h6/Current/ in the far right column (not seasonally adjusted data) note that M2 money supply is contracting in recent months. Welcome to deflation and the gold Wave 2 Cyclical Bear Market that began on 3-17-08.
Reliable lead indicator NEM is in Wave C down of a Wave 2 minor intermediate term 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.
GDX, HUI, and GLD created downside gaps at 46.67, 432.61, 93.53 at 7-11's open. The XAU doesn't have one according to Yahoo's data.
GDX/HUI/XAU/GLD created downside gaps at 7-10's open at 46.35, 419.06, 182.27, 91.50. NEM created a downside gap recently at 47.54.
Reliable lead indicator NEM's downside gaps to watch are 49.18 (filled 7-17), 47.54 (filled 7-18), 47.01, 45.10, 42.29, and 41.52. Downside gaps to watch for GLD (Gold ETF) are 93.53, 91.50, 87.42, 85.83, and, 84.58.
Reliable lead indicator NEM put in a Wave 2 major intermediate term cycle low on 5-1 at 42.36 (StockCharts uses slightly different price data ???, for reasons which escape me, there obviously needs to be consistency), see http://stockcharts.com/charts/gallery.html?nem, then, obviously 42.29 and 41.52 shouldn't get filled/should be bullish breakaway gaps. 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.
SPX (S & P 500)/NDX (NASDAQ 100)/RUT (Russell 2000) probably finally bottomed on 7-15, see http://stockcharts.com/charts/gallery.html?%24spx, http://stockcharts.com/charts/gallery.html?%24ndx, and http://stockcharts.com/charts/gallery.html?%24rut. SPX appears to have put in a short term Wave 1 cycle high today 7-21 in rollover mode.
7-15's very bullish candles and the strong short term Wave 1 upcycle suggest that SPX/NDX/RUT probably finally bottomed. RUT's chart is the most bullish, with the largest bullish inverse spike and best chart.
SPX probably put in a Wave A major intermediate term (since 10-11-07) cycle low on 7-15-08, and, NDX/RUT probably put in a Wave 2 minor intermediate term cycle low on 7-15-08, for the countertrend Wave B major intermediate term upcycle since 3-17-08 for NDX and since 3-10-08 for RUT.
So, once NDX (two days into a short term Wave 2 downcycle, see http://stockcharts.com/charts/gallery.html?%24ndx, and, Thursday's bearish breakaway gap makes me cautious about trading NDX long, see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c) and RUT pull back and do a short term Wave 2 downcycle the next few days, I'll look to trade ultra long via QLD and UWM early in a short term Wave 3 upcycle. I might day trade ultra short via SDS, QID, or TWM on Tuesday, once I'm convinced that the short term Wave 1 upcycle has peaked.
The WMT (Walmart) Lead Indicator was a very bearish -1.00% versus SPX (S & P 500) today/on 7-21, was a modestly bullish +0.39% on 7-18, was +0.06% on 7-17, was -0.32% on 7-16, was a bullish +0.97% on 7-15, +0.94% on 7-14, -0.50% on 7-11, was a very bearish -1.50% on 7-10, -0.16% on 7-9, +2.16% on 7-8, +1.39% on 7-7, +0.07% on 7-3, +0.89% on 7-2, +1.10% on 7-1, -0.31% on 6-30, -0.56% on 6-27, +0.72% on 6-26, +0.82% on 6-25, +1.48% on 6-24, +0.67% on 6-23. The more important/longer the cycle is that's bottoming or peaking the longer the lag time tends to be before the indication kicks in, in this case strength (began on 7-15-08).
Trade the Cycles won't indicate that a major cycle low very likely occurred until a 5% follow through major buy signal occurs, but, since a strong short term Wave 1 upcycle occurred, then SPX has probably bottomed (on 7-15-08).
At least waiting for a strong multi day short term Wave 1 upcycle (typically about 2 to 3 sessions, which occurred from 7-15 to 7-18) before looking to trade long overnight, then, one should wait for a pullback/short term Wave 2 downcycle (typically about 1.5 to 3 sessions) before trading long overnight (look to go long early in a short term Wave 3 upcycle, that typically lasts 3 to 5 sessions).
Since SPX (S & P 500) probably bottomed I'll look to trade rockets. It makes a lot of sense to trade with the wind at your back.
Once SPX puts in a Wave A major intermediate term cycle low (probably did on 7-15-08) watch upside gaps at 1321.97, 1342.83, 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 very sharp -4.08% today 7-21 versus SPX falling a slight -0.05%, which is a very sharp +4.13% rise in complacency (-4.08+ -0.05% = -4.13% decline in the SPX (S & P 500) wall of worry) that points to some severe weakness early on Tuesday 7-22.
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).
.......http://www.JoeFRocks.com/
NEM XAU HUI
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
12:44 PM
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