SPX (S & P 500) Appears To Have Finally Put In A Wave 2 Minor Intermediate Term Cycle Low Today
SPX (S & P 500) appears to have finally put in a Wave 2 minor intermediate term (since 5-19-08) cycle low today, see http://stockcharts.com/charts/gallery.html?%24spx. Note the bullish very large inverse spike on today 7-1's bullish white (indicates a close above the open) candle.
In order for SPX's (not the case for NDX/RUT) downcycle since 5-19-08 to be a Wave 2 minor intermediate term downcycle, today 7-1 basically HAS to be the bottom, since SPX only bottomed slightly above 3-17-08's cycle low percentage wise, see http://stockcharts.com/charts/gallery.html?%24spx.
Also, the Walmart (WMT) Lead Indicator was a very bullish +1.10% versus SPX today 7-1, and, has turned bullish short term (was -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).
Additionally, Walmart (WMT) filled it's downside gap at 55.75 today, then bounced substantially, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=on&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. Often important cycle highs/lows occur shortly after gap filling action is completed.
SPX/NDX/RUT have to do a strong multi day short term Wave 1 upcycle (typically about 2 to 3 sessions), in which a 2% follow through (after breaking the Wave 2 minor intermediate term downcycle trendline) buy signal occurs, in order for Trade the Cycles to indicate that a Wave 2 minor intermediate term cycle low very likely occurred.
Then, one should wait for a pullback/short term Wave 2 downcycle (typically about 2 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).
Looking at the 5 day intraday chart it looks like SPX will be firm at tomorrow 7-2's open, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=, and, should do an intraday Elliott Wave ABC down up down downcycle, after which I'll probably be looking to trade SPX/NDX/RUT ultra long via SSO, QLD, or UWM. I might even hold a long position overnight.
I might trade ultra short early on tomorrow via SDS, QID, or TWM. Today I day traded GDX short, shorting at 49.11055 and covered at 49.0099. My entry point should have been better, but, it wasn't the greatest day to trade short, because, GDX/HUI/XAU made large bullish gaps up at the open, and, the NEM Lead Indicator was bullish.
Once SPX puts in a Wave 2 minor intermediate term cycle low (probably did today 7-1) 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 significant -1.25% today 7-1 versus SPX rising a modest +0.38%, which is a significant +0.87% rise in complacency (-1.25% + +0.38% = -0.87% decline in the SPX (S & P 500) wall of worry) that points to some significant weakness early on Wednesday 7-2, after a likely pop/strength at the open/very early on.
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).
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 on 6-16 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'm looking to go long, since GNOLF.OB completed a short term Wave 2 downcycle on Friday 6-27 (bullish large inverse spike on a white candle, and, 1.617 million shares on 6-27 and 1.26 million shares on 6-30). I'll be looking to go long tomorrow 7-2, early in a very short term Wave 3 upcycle, after a very short term Wave 2 downcycle bottoms.
I'm looking to short GDX (Gold Miners ETF) tomorrow 7-2 (or on 7-3), after likely early strength, because, the Newmont Mining (NEM) Lead Indicator is extremely bearish short term, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem, and, the countertrend Wave B type upcycle since early June (peaking in rollover mode versus early May's cycle high) is peaking. GDX/HUI/XAU/GLD's cycles are very bearish. The NEM Lead Indicator was +1.15% versus the XAU today/on 7-1, was -1.38% on 6-30, -2.45% on 6-27, -0.95% on 6-26, -0.08% on 6-25.
GDX/HUI/XAU/GLD are actually still in the countertrend Wave B upcycle that began in very early May. The upcycle since early June is the upcycle since early May peaking in rollover mode.
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.
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.
GLD filled it's big bearish breakaway gap at 92.56 from April 18 today 7-1, see http://stockcharts.com/charts/gallery.html?gld.
I hope you realize that "Deflation Is Everywhere!," see http://tradethecycles.blogspot.com/2008/05/deflation-is-everywhere.html.
NEM is in Wave 3 up 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.
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 in March, 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
In order for SPX's (not the case for NDX/RUT) downcycle since 5-19-08 to be a Wave 2 minor intermediate term downcycle, today 7-1 basically HAS to be the bottom, since SPX only bottomed slightly above 3-17-08's cycle low percentage wise, see http://stockcharts.com/charts/gallery.html?%24spx.
Also, the Walmart (WMT) Lead Indicator was a very bullish +1.10% versus SPX today 7-1, and, has turned bullish short term (was -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).
Additionally, Walmart (WMT) filled it's downside gap at 55.75 today, then bounced substantially, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=on&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. Often important cycle highs/lows occur shortly after gap filling action is completed.
SPX/NDX/RUT have to do a strong multi day short term Wave 1 upcycle (typically about 2 to 3 sessions), in which a 2% follow through (after breaking the Wave 2 minor intermediate term downcycle trendline) buy signal occurs, in order for Trade the Cycles to indicate that a Wave 2 minor intermediate term cycle low very likely occurred.
Then, one should wait for a pullback/short term Wave 2 downcycle (typically about 2 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).
Looking at the 5 day intraday chart it looks like SPX will be firm at tomorrow 7-2's open, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=, and, should do an intraday Elliott Wave ABC down up down downcycle, after which I'll probably be looking to trade SPX/NDX/RUT ultra long via SSO, QLD, or UWM. I might even hold a long position overnight.
I might trade ultra short early on tomorrow via SDS, QID, or TWM. Today I day traded GDX short, shorting at 49.11055 and covered at 49.0099. My entry point should have been better, but, it wasn't the greatest day to trade short, because, GDX/HUI/XAU made large bullish gaps up at the open, and, the NEM Lead Indicator was bullish.
Once SPX puts in a Wave 2 minor intermediate term cycle low (probably did today 7-1) 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 significant -1.25% today 7-1 versus SPX rising a modest +0.38%, which is a significant +0.87% rise in complacency (-1.25% + +0.38% = -0.87% decline in the SPX (S & P 500) wall of worry) that points to some significant weakness early on Wednesday 7-2, after a likely pop/strength at the open/very early on.
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).
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 on 6-16 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'm looking to go long, since GNOLF.OB completed a short term Wave 2 downcycle on Friday 6-27 (bullish large inverse spike on a white candle, and, 1.617 million shares on 6-27 and 1.26 million shares on 6-30). I'll be looking to go long tomorrow 7-2, early in a very short term Wave 3 upcycle, after a very short term Wave 2 downcycle bottoms.
I'm looking to short GDX (Gold Miners ETF) tomorrow 7-2 (or on 7-3), after likely early strength, because, the Newmont Mining (NEM) Lead Indicator is extremely bearish short term, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem, and, the countertrend Wave B type upcycle since early June (peaking in rollover mode versus early May's cycle high) is peaking. GDX/HUI/XAU/GLD's cycles are very bearish. The NEM Lead Indicator was +1.15% versus the XAU today/on 7-1, was -1.38% on 6-30, -2.45% on 6-27, -0.95% on 6-26, -0.08% on 6-25.
GDX/HUI/XAU/GLD are actually still in the countertrend Wave B upcycle that began in very early May. The upcycle since early June is the upcycle since early May peaking in rollover mode.
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.
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.
GLD filled it's big bearish breakaway gap at 92.56 from April 18 today 7-1, see http://stockcharts.com/charts/gallery.html?gld.
I hope you realize that "Deflation Is Everywhere!," see http://tradethecycles.blogspot.com/2008/05/deflation-is-everywhere.html.
NEM is in Wave 3 up 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.
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 in March, 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
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