The Savvy Non Contrarian Gold Commercial Traders Continue To Go Massively Short! (Paragraph 6 Updated)
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.
The extremely bearish gold COT data jives with the extremely bearish NEM Lead Indicator, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem. The NEM Lead Indicator was a bullish +0.62% versus the XAU today/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 gold COT data and the NEM Lead Indicator jive well with GDX/HUI/XAU/GLD entering 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 severe weakness after very brief strength on 7-15-08 looks like (very likely) the start of the Wave C minor intermediate term downcycle, 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.
GDX/HUI/XAU/GLD (GLD might not have peaked yet/could lag the stocks as it tends to do) peaked in rollover mode early on 7-15 versus the May and July 1 Cycle highs, see http://stockcharts.com/charts/gallery.html?gdx, which jives with the extremely bearish NEM Lead Indicator and gold COT data recently.
Monday 7-21's or Tuesday's likely decline could be large. It looks like GDX/HUI/XAU/GLD will experience another severe Wave C type plunge on Monday and/or Tuesday, possibly after significant early strength on Monday (would give me a chance to double short gold with DZZ), then the Wave A type crash since very early on Tuesday 7-15 will probably bottom on Monday or Tuesday (assuming it didn't bottom already), 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.
Even if the Wave A type crash since very early on Tuesday 7-15 has bottomed, or, bottoms on Monday or Tuesday, it's still just Wave A of a larger short term Wave A downcycle.
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 Monday. The worst thing that happens if I miss another big move is I buy DZZ when it does a short term Wave 2 downcycle.
My GDX (Gold Miners ETF) short at 46.3401 obviously looks a lot better now. NEM might fill downside gaps at 47.54 (filled today 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.
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, then, NDX's chart and candle on 7-15 looks better than SPX's.
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 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 Monday, once I'm convinced that the short term Wave 1 upcycle has peaked.
The WMT (Walmart) Lead Indicator was a modestly bullish +0.39% versus SPX (S & P 500) today/on 7-18, was a slightly bullish +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, if a strong short term Wave 1 upcycle occurs, then SPX has probably bottomed (probably did 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 -3.76% today 7-18 versus SPX rising a slight +0.03%, which is a very sharp +3.73% rise in complacency (-3.76% + +0.03% = -3.73% decline in the SPX (S & P 500) wall of worry) that points to some severe weakness early on Monday 7-21.
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
The extremely bearish gold COT data jives with the extremely bearish NEM Lead Indicator, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem. The NEM Lead Indicator was a bullish +0.62% versus the XAU today/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 gold COT data and the NEM Lead Indicator jive well with GDX/HUI/XAU/GLD entering 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 severe weakness after very brief strength on 7-15-08 looks like (very likely) the start of the Wave C minor intermediate term downcycle, 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.
GDX/HUI/XAU/GLD (GLD might not have peaked yet/could lag the stocks as it tends to do) peaked in rollover mode early on 7-15 versus the May and July 1 Cycle highs, see http://stockcharts.com/charts/gallery.html?gdx, which jives with the extremely bearish NEM Lead Indicator and gold COT data recently.
Monday 7-21's or Tuesday's likely decline could be large. It looks like GDX/HUI/XAU/GLD will experience another severe Wave C type plunge on Monday and/or Tuesday, possibly after significant early strength on Monday (would give me a chance to double short gold with DZZ), then the Wave A type crash since very early on Tuesday 7-15 will probably bottom on Monday or Tuesday (assuming it didn't bottom already), 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.
Even if the Wave A type crash since very early on Tuesday 7-15 has bottomed, or, bottoms on Monday or Tuesday, it's still just Wave A of a larger short term Wave A downcycle.
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 Monday. The worst thing that happens if I miss another big move is I buy DZZ when it does a short term Wave 2 downcycle.
My GDX (Gold Miners ETF) short at 46.3401 obviously looks a lot better now. NEM might fill downside gaps at 47.54 (filled today 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.
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, then, NDX's chart and candle on 7-15 looks better than SPX's.
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 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 Monday, once I'm convinced that the short term Wave 1 upcycle has peaked.
The WMT (Walmart) Lead Indicator was a modestly bullish +0.39% versus SPX (S & P 500) today/on 7-18, was a slightly bullish +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, if a strong short term Wave 1 upcycle occurs, then SPX has probably bottomed (probably did 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 -3.76% today 7-18 versus SPX rising a slight +0.03%, which is a very sharp +3.73% rise in complacency (-3.76% + +0.03% = -3.73% decline in the SPX (S & P 500) wall of worry) that points to some severe weakness early on Monday 7-21.
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
1:11 PM
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