SPX (S & P 500) Probably Didn't Put In An Intermediate Term Cycle Low Yet
SPX (S & P 500) obviously probably didn't put in a Wave 2 minor intermediate term (since 5-19-08) cycle low yet, see http://stockcharts.com/charts/gallery.html?%24spx. Note the bearish medium spike on today 7-2's bearish black (indicates a close below the open) candle, and, SPX only closed a penny above the session cycle low.
Early weakness is likely tomorrow, and, SPX (S & P 500) may finally bottom early tomorrow, 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, 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.
The Walmart (WMT) Lead Indicator was a bullish +0.89% versus SPX today 7-2, and, has turned very bullish short term (was +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.
Today I traded SSO, but, quickly exited (bought at 61.3799 and sold at 61.4301) with a modest profit when I realized I was probably trading a countertrend Wave B rebound, because, I knew that SPX was likely to put in a cycle low not far above yesterday's, if SPX had bottomed yesterday, due to the nature of cycles. Upcycles and downcycles almost always begin very flat.
SPX's (not the case for NDX/RUT) Elliott Wave count will probably change. It's probably not a Wave 2 minor intermediate term (since 5-19-08) downcycle. It's probably putting in a Wave A major intermediate term (since 10-11-07) cycle low, that appeared to have bottomed on 3-17-08.
The market closes at 1 pm tomorrow.
Walmart (WMT) filled it's downside gap at 55.75 yesterday, 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).
Once SPX puts in a Wave 2 minor intermediate term cycle low 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 rose an unusually large +9.60% today 7-2 versus SPX falling a significant -1.82%, which is an unusually large +7.78% rise in fear (+9.60% + -1.82% = +7.78% rise in the SPX (S & P 500) wall of worry) that points to some significant weakness early on Thursday 7-3 followed by strength, or, possibly sideways action, that tends to occur after important cycle lows/highs occur.
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 7-3, early in a very short term Wave 3 upcycle, since a very short term Wave 2 downcycle probably bottomed today.
I'm looking to short GDX (Gold Miners ETF) tomorrow 7-3 (will probably have to wait for a Wave B type rebound), 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) very likely peaked.
GDX/HUI/XAU/GLD's cycles are very bearish. The NEM Lead Indicator was -0.82% versus the XAU today/on 7-2, was +1.15% on 7-1, was -1.38% on 6-30, -2.45% on 6-27, -0.95% on 6-26, -0.08% on 6-25, so, it's very bearish short term.
GDX/HUI/XAU/GLD were in a countertrend Wave B upcycle that began in very early May. The upcycle since early June was 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 yesterday 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 A own of a monthly downcycle 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
Early weakness is likely tomorrow, and, SPX (S & P 500) may finally bottom early tomorrow, 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, 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.
The Walmart (WMT) Lead Indicator was a bullish +0.89% versus SPX today 7-2, and, has turned very bullish short term (was +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.
Today I traded SSO, but, quickly exited (bought at 61.3799 and sold at 61.4301) with a modest profit when I realized I was probably trading a countertrend Wave B rebound, because, I knew that SPX was likely to put in a cycle low not far above yesterday's, if SPX had bottomed yesterday, due to the nature of cycles. Upcycles and downcycles almost always begin very flat.
SPX's (not the case for NDX/RUT) Elliott Wave count will probably change. It's probably not a Wave 2 minor intermediate term (since 5-19-08) downcycle. It's probably putting in a Wave A major intermediate term (since 10-11-07) cycle low, that appeared to have bottomed on 3-17-08.
The market closes at 1 pm tomorrow.
Walmart (WMT) filled it's downside gap at 55.75 yesterday, 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).
Once SPX puts in a Wave 2 minor intermediate term cycle low 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 rose an unusually large +9.60% today 7-2 versus SPX falling a significant -1.82%, which is an unusually large +7.78% rise in fear (+9.60% + -1.82% = +7.78% rise in the SPX (S & P 500) wall of worry) that points to some significant weakness early on Thursday 7-3 followed by strength, or, possibly sideways action, that tends to occur after important cycle lows/highs occur.
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 7-3, early in a very short term Wave 3 upcycle, since a very short term Wave 2 downcycle probably bottomed today.
I'm looking to short GDX (Gold Miners ETF) tomorrow 7-3 (will probably have to wait for a Wave B type rebound), 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) very likely peaked.
GDX/HUI/XAU/GLD's cycles are very bearish. The NEM Lead Indicator was -0.82% versus the XAU today/on 7-2, was +1.15% on 7-1, was -1.38% on 6-30, -2.45% on 6-27, -0.95% on 6-26, -0.08% on 6-25, so, it's very bearish short term.
GDX/HUI/XAU/GLD were in a countertrend Wave B upcycle that began in very early May. The upcycle since early June was 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 yesterday 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 A own of a monthly downcycle 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
2:24 PM
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