Trade the Cycles

Tuesday, September 30, 2008

Today Was Probably Countertrend Action By SPX (S & P 500)/Major Averages

Today 9-30 was probably countertrend action by SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx)/major averages, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, which means that they probably didn't bottom yesterday 9-29-08.

A major clue is that SPX doesn't have the usual bullish large inverse spike on yesterday's candle, that tends to mark important cycle lows. Also, the broad market Walmart (WMT) Lead Indicator was an extremely bearish -2.81% versus SPX today/on 9-30, which points to severe weakness tomorrow.

Normally an extremely bearish (or bullish) lead indicator is very short term contrarian, and, in this case would point to more strength tomorrow, but, due to the extreme volatility right now, what seems like an extreme level for the Walmart (WMT) Lead Indicator isn't really extreme, because, volatility is obviously extreme now, so, much more extreme readings tend to occur for the Walmart (WMT) Lead Indicator.

Reliable broad market lead indicator Walmart (WMT) has a very large very bullish inverse spike on a bullish white (close above the open) candle today 9-30, see http://stockcharts.com/charts/gallery.html?wmt. Walmart (WMT) appears to have put in a monthly cycle low today.

In the gold sector it's become clear that 9-22-08 was a short term Wave 1 (began 9-11-08) cycle high for GDX/HUI/XAU, see http://stockcharts.com/charts/gallery.html?gdx. So, a big move up is likely for GDX/HUI/XAU once they bottom in the next day or two, but, it'll probably (barring a sector crash) be a short term Wave 3 upcycle, not Wave 5 of a big short term Wave 1 upcycle that was discussed last week.

Also, today's severe weakness made it clear that gold/GLD's (http://stockcharts.com/charts/gallery.html?gld) in a big short term Wave 2 downcycle (lagging GDX/HUI/XAU to the downside), or, the likely countertrend Wave B monthly upcycle that began on 9-11-08 peaked yesterday 9-29.

I'll be looking to trade gold double short via DZZ tomorrow. I'm also be looking to ultra short the XOI via DUG, see http://finance.yahoo.com/q/ta?s=%5Exoi&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, or, I'll be looking to double short oil via DTO, the double short oil ETN (Exchange Traded Note).

Note the oil ETF USO's huge bearish gap down from 86.21 at yesterday 9-29's open, see http://finance.yahoo.com/q/ta?s=uso&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=.

GLD (gold ETF) probably didn't put in a Wave A major intermediate term cycle low on 9-11-08, whereas, GDX/HUI/XAU probably did. Note that GLD (http://stockcharts.com/charts/gallery.html?gld) has three very large very bearish spikes recently, on 9-18, on 9-26, and, on 9-29.

GLD made a large bearish breakaway gap down from 89.57 today 9-30, see http://finance.yahoo.com/q/ta?s=gld&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. Also note the huge extremely bearish spike on yesterday 9-29's intraday chart.

The savvy non contrarian gold Commercial Traders nailed last week's and this week's weakness, see the third/last data at http://www.cftc.gov/dea/options/deacmxsof.htm, engaging in massive long liquidation in the 5 day period ending 9-23-08, and, they engaged in aggressive short selling.

From 9-11-08's likely (in a normal market, the sector might crash with the market though) Wave A major intermediate term cycle low to 9-22-08's short term Wave 1 cycle high GDX/HUI/XAU did an Elliott Wave 12345 up down up down up pattern, and, since then have done/are doing an Elliott Wave ABC down up down pattern in the short term Wave 2 downcycle, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

The GDX/HUI/XAU short term Wave 2 downcycle since 9-22-08 might not have bottomed yet. Today 9-30's sector NEM Lead Indicator was a slightly bearish -0.16% versus the XAU, which might point to more downside, as does the extremely bearish (which is normally very short term bullish, but, probably isn't now due to the extreme volatility) broad market Walmart (WMT) Lead Indicator, at -2.81% versus the S & P 500 (SPX) today/on 9-30.

Reliable lead indicator NEM (http://stockcharts.com/charts/gallery.html?nem) might have bottomed today (doubtful), see http://finance.yahoo.com/q/ta?s=nem&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

The Gold ETF GLD took out it's 9-18-08 cycle high yesterday (cycle high at 92 on 9-29), see http://stockcharts.com/charts/gallery.html?gld, though it doesn't show up on it's intraday chart, see http://finance.yahoo.com/q/ta?s=gld&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. GLD is in a big short term Wave 2 downcycle, or, it's in a short term Wave A downcycle, if the countertrend monthly upcycle that began on 9-11-08 peaked yesterday 9-29.

Reliable lead indicator NEM has the most bullish/large inverse spike on a bullish white (close above the open) candle on 9-11-08, see http://stockcharts.com/charts/gallery.html?nem. NEM closed at 37.28 on 9-11 (session cycle high at 38), well above the session cycle low and potential Cyclical Bear Market (since 1-31-06) cycle low at 35.79.

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.

A Cyclical Bear Market 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/

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What You Won't Hear From The Looney Bogus Gold Quacks

The US Dollar experienced a major breakout in August, see annotated chart one at http://www.joefrocks.com/GoldStockCharts.html.

The US Dollar probably entered a Cyclical Bull Market on 3-17-08, the same day that gold/HUI probably entered a Wave 2 Cyclical Bear Market.

Gold's down -$43.60 right now, despite the uncertainty concerning the bailout. Not exactly a safe haven. Gold fell nearly -30% from 3-17-08 until 9-11-08, despite the credit crisis.

Gold IS a safe haven from inflationary rising interest rate economic upcycles, such as the easy credit/mortgage real estate and consumer boom (credit binge) from 2002 until 2006, NOT the diametric opposite situation we find ourselves in now. Ignore the quacks.

.......http://www.JoeFRocks.com/

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Monday, September 29, 2008

...........An S & P 500 (SPX)/Major Averages Crash Is In Effect

The S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) fell -8.75% today 9-29-08 (a bit more after hours, after I wrote this), and, closed right at the session cycle low 1107.06 after hours (4:15 pm), which means that more downside early tomorrow is very likely. The NASDAQ 100 (NDX) fell -10.52% today 9-29-08.

This is a meltdown/crash folks, because, the bailout wasn't properly explained to people, see http://tradethecycles.blogspot.com/2008/09/some-bailout-math-for-ya-baby.html. A crash would have probably occurred anyway due to the substantial economic slowdown that's in effect. The positive is that the crash is happening sooner rather than later.

The S & P 500 (SPX) Volatility Index VIX rose a humongous +34.66% today 9-29, which is obviously a gigantic rise in fear that points to more probably severe weakness tomorrow 9-30-08.

Reliable broad market lead indicator Walmart (WMT) has a large bearish spike on a bearish black (close below the open) candle today 9-29, see http://stockcharts.com/charts/gallery.html?wmt. The Walmart (WMT) Lead Indicator was an extremely bullish (which is very short term bearish) +5.03% versus the S & P 500 (SPX) today.

As a trader it obviously makes sense to sit on the sidelines until the dust settles, because, rapid wild swings are occurring, and, the market is obviously very newsdriven.

In the gold sector it's become clear that 9-22-08 was a short term Wave 1 (began 9-11-08) cycle high for GDX/HUI/XAU, see http://stockcharts.com/charts/gallery.html?gdx. So, a big move up is likely for GDX/HUI/XAU once they bottom in the next day or two, but, it'll probably (barring a sector crash) be a short term Wave 3 upcycle, not Wave 5 of a big short term Wave 1 upcycle that was discussed last week. Also, gold is in a big short term Wave 3 upcycle, so, I'll be looking to trade gold double long via DGP, once the market calms down some.

From 9-11-08's likely (in a normal market, the sector might crash with the market though) Wave A major intermediate term cycle low to 9-22-08's short term Wave 1 cycle high GDX/HUI/XAU did an Elliott Wave 12345 up down up down up pattern, and, since then have done/are doing an Elliott Wave ABC down up down pattern in the short term Wave 2 downcycle, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

The GDX/HUI/XAU short term Wave 2 downcycle since 9-22-08 probably didn't bottom yet. Today 9-29's sector NEM Lead Indicator was a slightly bearish -0.18% versus the XAU, which points to more downside, as does the extremely bullish (which is very short term bearish) broad market Walmart (WMT) Lead Indicator, at +5.03% versus the S & P 500 (SPX) today/on 9-29.

Reliable lead indicator NEM (http://stockcharts.com/charts/gallery.html?nem) might have bottomed today, see http://finance.yahoo.com/q/ta?s=nem&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, since it put in a large bullish inverse spike on a bullish white (close above the open) candle late today on it's intraday chart, and, is trying to complete an Elliott Wave 12345 up down up down up pattern on the intraday chart.

This obviously isn't a normal market, so, sitting on the sidelines until the dust settles makes a lot of sense for the vast majority of traders/investors. NEM has a larger bullish inverse spike on today 9-29's candle versus a bearish large spike, see http://stockcharts.com/charts/gallery.html?nem.

The Gold ETF GLD took out it's 9-18-08 cycle high today (cycle high at 92 today 9-29), see http://stockcharts.com/charts/gallery.html?gld, though it doesn't show up on it's intraday chart, see http://finance.yahoo.com/q/ta?s=gld&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. GLD is in a big short term Wave 3 upcycle.

Reliable lead indicator NEM has the most bullish/large inverse spike on a bullish white (close above the open) candle on 9-11-08, see http://stockcharts.com/charts/gallery.html?nem. NEM closed at 37.28 on 9-11 (session cycle high at 38), well above the session cycle low and potential Cyclical Bear Market (since 1-31-06) cycle low at 35.79.

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.

A Cyclical Bear Market 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/

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............Some Bailout Math For Ya Baby

I haven't seen either presidential candidate, or Treasury Secretary Hank Paulson, or, any other government official describe the bailout in terms of the mortgage investments, and, how the government might get capital gains eventually as opposed to losses, and, WILL earn a respectable income.

If the entire $700 Billion is used, and, if the mortgage investments are bought for 50 cents on the dollar (original price), and, if the mortgage investments earn a net 7% annual interest after delinquencies (conservative, could be 10%ish, since they'll be bought (this example assumes) at roughly 50 cents on the dollar), and, they are sold in five years for 70 cents on the dollar (original price), the US government will have made 40% (20 cents profit versus a 50 cent purchase price) in 5 years, plus 7%+ interest pre year, which is a very respectable 13% to 14%ish per year return (40% in 5 years is less than 8%/year due to compounding obviously, so, it's NOT 15% per year).

7% interest on $700 Billion is a healthy $49 Billion/year, that might actually be $70 billion/year if the yield is 10% instead of 7% (original yield of 5% for this example). So, the US government should earn 5 times $49 Billion/year over 5 years, which is $245 Billion. The bailout doesn't look so bad LONG TERM and could conceivably be a good money maker, depending on what price is paid for the mortgage investments. Short/intermediate term the budget gets squeezed at a bad time.

If the US government is careful about how they buy the mortgage investments (at what price), a capital gain is likely once real estate recovers. Certainly a capital loss may occur, but it should be far less than $700 Billion, maybe $100 Billion or $200 Billion at most, which should be more than offset by the interest earned (about $245 Billion or more). So, the bailout long term probably isn't that bad for the US, and, a respectable 7%+ (could be close to 10% since they'll be bought at roughly 50 cents on the dollar) in interest should be earned each year ($49+ Billion/year).

.......http://www.JoeFRocks.com/

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Sunday, September 28, 2008

....."Maybe Short-Selling Isn’t So Bad, After All"

"Maybe Short-Selling Isn’t So Bad, After All," see http://www.nytimes.com/2008/09/28/business/28stra.html. Part of the article is below.

"FEDERAL regulators have banned short sales of more than 800 stocks, mostly of financial companies, in an effort to stabilize prices in a shaky market. But the move may have an unintended consequence: reducing the stock market’s efficiency and prolonging the current crisis.

That’s the consensus of several finance professors who have devoted considerable energy to the study of short-selling — a mode of trading in which a profit is made from a price decline. Short-sellers, like investors who go “long” on a stock, make money by buying low and selling high. The difference is that short-sellers reverse the usual chronological order, selling first and buying back later, at what they hope will be a lower price. They accomplish this time switch by selling borrowed shares and agreeing to return them later.

Were short-sellers ganging up on various stocks in the recent tumult, causing prices to plummet? Adam Reed, a finance professor at the University of North Carolina at Chapel Hill who has extensively studied short-sellers’ behavior and its effects on the markets, said it was “hypothetically possible” that they were. He added, though, that the question still needs study because real-time information about these possible “bear raids” isn’t available. But he would be surprised if short-sellers were a major cause of the market’s turmoil over the last year.

“In recent years,” he said, “when academic researchers have looked for bear raids — even in those areas in which investors suspected that they existed — they haven’t found them.”

Consider a group of 19 beleaguered financial stocks for which the S.E.C. restricted short sales between July 21 and Aug. 15. Arturo Bris, a finance professor at IMD, the Swiss business school, who also is a research fellow at the Yale International Center for Finance, analyzed short-sellers’ behavior in the months before this S.E.C. action. He concluded that the poor performance of those 19 stocks in the year leading to that action “cannot be attributed to short-selling activities.” One of the statistics on which Professor Bris focused was the so-called short-interest ratio, which is calculated by dividing the number of shares held short by the average daily trading volume. On average, those 19 stocks had short-interest ratios that were no higher than those of other financial stocks in the year leading up to the S.E.C. policy change. And here is another telling statistic: While the S.E.C. restrictions were in place, these stocks, on average, actually performed worse than the rest of the market.

What about the dismal performance of many financial stocks earlier this month? It’s too early to know, Professor Reed said, because the data are not all in. But here, too, he said he doubts that short-sellers played any significant role.

Consider, for example, what short-sellers did on Sept. 9, a day that rumors circulated widely about a possible bankruptcy at Lehman Brothers and Lehman’s stock fell 45 percent, to $7.79 from $14.15. According to Professor Bris, the average price at which short-sellers sold Lehman stock that day was $9.29, significantly closer to the day’s low than to the high. That implies that they were reacting to the downward momentum, not causing it.

Typically, Professor Bris said, “short-sellers trade in response to past negative news, rather than inducing current stock price drops.”

What about “naked shorting“ or “failure to deliver” borrowed shares, a practice that was the focus of the S.E.C. restrictions in July? These terms are used to describe a breach of the standard practice in which a short-seller has three trading days to actually borrow the shares he is selling short. Naked shorting has been blamed for some of financial stocks’ recent woes, but Professor Reed says this claim isn’t supported by the evidence.

Each day, the exchanges publish a list of stocks for which there has been even a very small number of failures to deliver. In recent months, according to Professor Reed, the large financial stocks have hardly ever appeared on those lists."

.......http://www.JoeFRocks.com/

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Saturday, September 27, 2008

Some Thoughts On Monday, The Big Picture, A Potential Crash

GDX (Gold Miners ETF, and HUI/XAU) doesn't appear to have bottomed yet, from looking at the daily candlestick chart, see http://stockcharts.com/charts/gallery.html?gdx. There's a relatively large bearish spike on a bearish black (close below the open) candle yesterday/on Friday 9-26, which would be unusual for an important cycle low. Also, GDX didn't fill it's downside gap at 35.20 from 9-22 yet, so, 35.20 probably will get filled on Monday.

So, it's unlikely that the very short term GDX/HUI/XAU downcycle since late on 9-22-08 has bottomed, see the 5 day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c. A relatively brief countertrend Wave B type pop might occur early on Monday, so, be careful about going long the gold sector early on Monday if GDX's downside gap at 35.20 hasn't been filled.

As I've discussed in recent days there should be, based on the nature of cycles, a huge final Wave 5 GDX/HUI/XAU (http://stockcharts.com/charts/gallery.html?gdx) spike move, once the current downside gap filling action is completed (probably on Monday). The short term Wave 1 upcycle since 9-11-08 (should obviously call it a Wave 1 monthly upcycle at this point instead of short term, since it probably didn't peak on 9-22) has been a monster, so, based on the nature of cycles, the huge final Wave 5 GDX/HUI/XAU spike move should be a monster.

This obviously assumes that GDX/HUI/XAU's (http://stockcharts.com/charts/gallery.html?gdx) monster short term Wave 1 upcycle since 9-11-08 didn't peak yet/on 9-22-08. The candles on 9-22 are bullish/white (close above the open), and, don't have the usual large bearish spike that tends to mark important cycle highs, so, the monster GDX/HUI/XAU short term Wave 1 upcycle since 9-11-08 probably remains in effect.

As I discussed yesterday 9-26, I'm looking to double short gold (lagging GDX/HUI/XAU to the downside) via DZZ early next week, so, one should be trading gold short (not a recommendation) based upon the Trade the Cycles system, the extremely bearish latest gold COT data (see third data at http://www.cftc.gov/dea/options/deacmxsof.htm), and, the huge/very large bearish spikes that occurred on 9-18 and 9-26.

The Gold ETF GLD has a very large very bearish spike on yesterday 9-26's candle, and, GLD has a huge extremely bearish spike on 9-18's candle, that might be a very important countertrend Wave B (since 9-11-08) cycle high, see http://stockcharts.com/charts/gallery.html?gld. Wave A down of gold's Wave 2 Cyclical Bear Market since 3-17-08 probably didn't bottom on 9-11-08, whereas, it probably did bottom for GDX/HUI/XAU. The large cap gold stocks tend to lead the metal.

I was asked by a reader who's an investor type about the long term outlook for HUI/XAU. 9-11-08 was probably the Wave A down cycle low of the likely Wave 2 Cyclical Bear Market since mid March 2008. HUI will probably bottom at 200 to 220 next year, when the Wave 2 Cyclical Bear Market since mid March (3-17-08 for HUI) bottoms, in the Wave C major intermediate term downcycle (Wave B started on 9-11-08), see chart 8 at http://www.joefrocks.com/GoldStockCharts.html, that shows approximately (won't know exactly until HUI bottoms next year) where HUI's primary multi year Secular Bull Market (since November 2000) uptrend line is.

It's basic technical analysis (and part of the "Trade the Cycles" system) that, the ONLY time that a sector is timely from a long term multi year perspective (for long term investors), is near it's primary multi year Secular Bull Market (since November 2000 for HUI) uptrend line. In the gold sector there is a whole lot of quacking going on, by a lot of bumbling quacks, some of whom are con artists.

Given the credit crisis and a weakening economy (obviously the two are highly correlated) a stock market crash might occur in the next few weeks, see http://tradethecycles.blogspot.com/2008/09/usworldwide-stock-market-crash-might.html.

Despite what you'll hear from the gold quacks, the gold sector will almost certainly get crushed in a stock market crash (it did in 1987, see the XAU at http://www.sharelynx.com/chartsfixed/XAU1987.gif), due to program selling. NEM and FCX are in the lead program trading index SPX (S & P 500).

.......http://www.JoeFRocks.com/

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Friday, September 26, 2008

GDX (Gold Miners ETF) Nearly Filled It's Downside Gap At 35.20 Late Today

GDX (Gold Miners ETF) nearly filled it's downside gap at 35.20 late today (session cycle low 35.24), see the 5 day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, and, see the daily candlestick chart at http://stockcharts.com/charts/gallery.html?gdx.

Based on GDX's (http://stockcharts.com/charts/gallery.html?gdx) Elliott Wave patterns since late on 9-22 (down up down pattern), see http://finance.yahoo.com/q/ta?s=GDX&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=, and the 1 day intraday candlestick chart, see http://finance.yahoo.com/q/ta?s=GDX&t=1d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=, which reveals a bullish candle just before session's end, it looks like 35.20 might be a bullish breakaway gap.

However, the intraday sector NEM Lead Indicator narrowed near session's end, see http://finance.yahoo.com/q/ta?s=^XAU&t=1d&l=on&z=m&q=l&p=&a=&c=^hui,nem, so, some early weakness and another GDX run at 35.20 won't be a big surprise.

Either way, whether GDX fills 35.20 or not I'll be looking to trade AEM (filled 60.94), FCX, or GDX long early on Monday, because, the sector NEM Lead Indicator has turned very bullish the past two days, at +0.90% versus the XAU today/on 9-26 and +1.45% on 9-25.

Also, the broad market Walmart (WMT) Lead Indicator, used in concert with the sector Lead Indicator, has turned extremely bullish short term (+0.64% versus the S & P 500 (SPX) on 9-26, +0.07% on 9-25, +1.09% on 9-24, +0.73% on 9-23, +2.46% on 9-22), 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.

I wasn't able to trade short like I normally would today, due to the credit/market crisis's short selling restrictions, so, I day traded SMN (Ultra Short Basic Materials), which made a large bullish breakaway gap at today's open, see http://finance.yahoo.com/q/ta?s=smn&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, buying it at 47.47 and selling it at 48.53.

The savvy non contrarian gold Commercial Traders nailed this week's weakness, see the third/last data at http://www.cftc.gov/dea/options/deacmxsof.htm, engaging in massive long liquidation in the 5 day period ending 9-23-08, and, they engaged in aggressive short selling.

Normally an unusually large change in the COT data like this points to the opposite of what one would think/is short term contrarian, in this case strength next week, that's just the way it normally works. However, looking at GLD's daily candlestick chart, see http://stockcharts.com/charts/gallery.html?gld, one can see that GLD has a very large very bearish spike on a bearish black (close below the open) candle today 9-26 (a countertrend Wave B cycle high occurred today, of Wave 4 down (since 9-18, or, it's a short term Wave A down since 9-18) of the countertrend Wave B upcycle since 9-11-08), and, GLD closed up +0.19 or +0.22% today, lagging GDX/HUI/XAU to the downside. So, on Monday/early next week I'll be looking to double short gold via DZZ.

An alternate scenario is that gold/GLD's likely countertrend Wave B upcycle since 9-11-08 already peaked on 9-18-08, and, is lagging GDX/HUI/XAU to the downside (probably didn't put in a Wave A major intermediate term cycle low on 9-11-08, whereas, GDX/HUI/XAU probably did), which jives with GLD's extremely large extremely bearish spike on 9-18, see http://stockcharts.com/charts/gallery.html?gld, and, jives with the most recent extremely bearish gold COT data, see the third/last data at http://www.cftc.gov/dea/options/deacmxsof.htm, with the savvy non contrarian gold Commercial Traders engaging in massive long liquidation in the 5 day period ending 9-23-08, and, they engaged in aggressive short selling.

It looks like GLD will fill today 9-26's downside gap at 86.49 early on Monday, see http://finance.yahoo.com/q/ta?s=gld&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, completing a huge Wave A down type move that began early today. Then, GLD should do a countertrend Wave B up type move for maybe a session or two at most, in which I'll look to double short gold via DZZ.

As I've discussed in recent days there should be, based on the nature of cycles, a huge final Wave 5 GDX/HUI/XAU (http://stockcharts.com/charts/gallery.html?gdx) spike move, once the current downside gap filling action is completed (today or Monday). The short term Wave 1 upcycle since 9-11-08 has been a monster, so, based on the nature of cycles, the huge final Wave 5 GDX/HUI/XAU spike move should be a monster.

This obviously assumes that GDX/HUI/XAU's (http://stockcharts.com/charts/gallery.html?gdx) monster short term Wave 1 upcycle since 9-11-08 didn't peak yet/on 9-22-08. The candles on 9-22 are bullish/white (close above the open), and, don't have the usual large bearish spike that tends to mark important cycle highs, so, the monster GDX/HUI/XAU short term Wave 1 upcycle since 9-11-08 probably remains in effect.

GDX/HUI/XAU created large bullish gaps at 9-22's open, that are now downside gaps at 35.20, 323.74, and 139.39, see GDX's 5 day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

The good news is that a great day trading (maybe/probably overnight also) opportunity will probably arise on Monday for gold bugs, even if 9-22's downside gaps get filled, because, the final large (probably huge in this case, because, the short term Wave 1 upcycle since 9-11-08 has been a monster) blowoff spike move (Wave 5 of Wave 5 of the short term Wave 1 upcycle) probably didn't occur yet, see http://stockcharts.com/charts/gallery.html?%24xau. 9-22's GDX/HUI/XAU candles are bullish/white, indicating a close above the open, and, there isn't the large bearish spike that tends to mark important cycle highs.

I'll be watching GDX's downside gap at 35.20 on Monday, from 9-22's open.

GDX/HUI/XAU are probably still in the third/final Wave 5 of the monster Short Term Wave 1 Upcycle that began on 9-11-08, see http://stockcharts.com/charts/gallery.html?gdx. Note that GDX (Gold Miners ETF) has done an up down up down up pattern since 9-11-08's likely Wave A major intermediate term cycle low, which is Wave A down of the likely Wave 2 Cyclical Bear Market since 3-17-08 (3-14-08 for the XAU).

It looks like GDX (Gold Miners ETF) will probably fill it's upside gap at 38.92 in the next week or so, then, probably a monster Short Term Wave 1 (since 9-11) cycle high will occur shortly thereafter. Obviously, watching GDX's upside gap at 38.92 is very important.

Gold/GLD might not have peaked on 9-18 as previously thought, see http://stockcharts.com/charts/gallery.html?gld, despite 9-18's huge extremely bearish spike, 9-18 might be a Wave 3 cycle high of the short term countertrend Wave B upcycle since 9-11-08.

Given the monster spike move by both gold stocks/GDX/HUI/XAU and gold/GLD since 9-11-08, and, the fact that gold/GLD probably didn't bottom on 9-11-08, this (once the short term Wave 1 upcycle since 9-11-08 peaks in a week or so) will be one of the best gold sector shorting opportunities I've ever seen (NOT a recommendation, I don't provide recommendations, I provide market timing info, that's all, YOU make your OWN decisions. Obviously, volatility is off the charts now).

A great GDX (Gold Miners ETF) and GLD (Gold ETF) short selling opportunity should arise in a week or so, when the short term Wave 1 upcycle since 9-11-08 peaks.

Typically I'll wait for a significant intraday Wave A type plunge, and, I carefully check the Elliott Wave count on the 5 day intraday candlestick charts (GDX/HUI/XAU/NEM and whatever I'm trading), as well as the NEM/WMT Lead Indicators, then I'll go short late in an intraday countertrend Wave B rebound or (probably) early in Wave C down. Large spikes tend to occur at or near important cycles highs on both the intraday and daily candlestick charts, so, I look for that also.

When the NEM and WMT Lead Indicators strongly agree the best trading opportunities tend to occur, so, the short selling opportunity that'll very likely occur late next week should be a great one for gold/GLD/GDX (and probably Harmony Gold (HMY)), see http://stockcharts.com/charts/gallery.html?gld.

Since gold/GLD (http://stockcharts.com/charts/gallery.html?gld) experienced extremely high volatility recently, which is what occurs at important cycle highs/lows, and, gold/GLD's cycle low on 9-11-08 lacks the usual bullish large inverse spike that tends to mark important cycle lows, plus the fact that gold/GLD tend to lag gold stocks/GDX/HUI/XAU, means that the short term cycle high that might have occurred on 9-18-08 or will occur in the next week or so for gold/GLD will probably be a countertrend Wave B cycle high of Wave C (since 7-15-08) of the Wave A major intermediate term downcycle since 3-17-08.

GDX/HUI/XAU probably entered a countertrend Wave B major intermediate term upcycle on 9-11-08.

Reliable lead indicator NEM created a bearish breakaway gap at 44.71 on 8-8 (filled), GDX created one at 38.92, HUI created one at 356.72 (filled 9-22), and, GLD created one at 86.09 (filled). Upside gaps were created on 7-23 at 47 for GDX (filled 9-22), 432.50 for HUI, 185.04 for the XAU, and, at 93.06 (filled 9-17) for GLD.

See SPX (S & P 500) at http://stockcharts.com/charts/gallery.html?%24spx)/SPX. An SPX Wave A major intermediate term cycle low appears to/might have occurred on 9-18, barring another major debacle in the next few days. SPX needs to hit a major 5% follow through buy signal before the Trade the Cycles system indicates that a major cycle low has very likely occurred. Note the large bullish inverse spike on 9-18's candle.

SPX created a bullish breakaway gap at 1206.51 at 9-19's open that got filled on 9-22, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

The huge gold sector spiking action recently has "countertrend" written all over it (from an intermediate term cycle point of view for GDX/HUI/XAU, not short term, though probably short term for gold/GLD). Countertrend action tends to be much more vertical/spiking type action than the action that occurs in normal upcycles.

GDX/HUI/XAU (http://stockcharts.com/charts/gallery.html?gdx) are very likely in a countertrend Wave B major intermediate term upcycle since 9-11-08, which is the Wave B upcycle of the likely Wave 2 Cyclical Bear Market since mid March 2008.

GDX/HUI/XAU (http://stockcharts.com/charts/gallery.html?gdx, gold/GLD lags and silver lags gold) probably finally put in a Wave A major intermediate term (since mid March, Wave A down of the Wave 2 Cyclical Bear Market) cycle low on 9-11-08.

Before holding positions overnight one obviously should wait for a strong/major 5% follow through buy signal (Wave 1 monthly upcycle, or, maybe a 5% major buy signal will occur after a Wave 3 short term upcycle, or, maybe after a very strong short term Wave 1 upcycle), then look to go long after a Wave 2 monthly downcycle or maybe after a short term Wave 4 downcycle (of a monthly upcycle), or, even after short term Wave 2 downcycle, if a very strong short term Wave 1 upcycle occurred.

Tuesday 9-9's extremely high GDX/HUI/XAU volatility is what tends to/almost always occurs near important cycle lows and cycle highs, so, 9-9's extremely high volatility indicated that an important cycle low was probably imminent/probably occurred on 9-11, as does the cycle picture and the Elliott Wave count, see annotated chart two at http://www.joefrocks.com/GoldStockCharts.html.

GDX/HUI/XAU and NEM created large bullish breakaway gaps at 9-12's open (downside gaps at 28.20, 262.97, 115.32, 37.28, GLD at 73.08), see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

Reliable lead indicator NEM has the most bullish/large inverse spike on a bullish white (close above the open) candle on 9-11-08, see http://stockcharts.com/charts/gallery.html?nem. NEM closed at 37.28 on 9-11 (session cycle high at 38), well above the session cycle low and potential Cyclical Bear Market (since 1-31-06) cycle low at 35.79.

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.

There are a lot of gold/silver stocks that have been crushed (as most of you know) and will probably soon (or already have) enter a Cyclical Bull Market. A few examples are AEM (hit a 5% major buy signal, and, appears to have entered a Wave 5 Cyclical Bull Market on 9-11-08), CDE, and NXG. I'll try to remember to point many of them out in the next few days/weeks.

The US Dollar entered a Wave 3 Minor Intermediate Term Upcycle on 7-15-08, see http://stockcharts.com/charts/gallery.html?%24usd, and, entered a Cyclical Bull Market within a Secular Bear Market on 3-17-08, after putting in a cycle low at 70.698. Note the very large bullish inverse spike on 3-17-08's and 7-15-08's candle.

The US Dollar hit a 5% major buy signal! (major breakout), see http://tradethecycles.blogspot.com/2008/08/us-dollar-hit-5-follow-through-major.html.

The coal ETF KOL (http://stockcharts.com/charts/gallery.html?kol) appears to have put in a Wave A major intermediate term cycle low on 9-16. It needs to hit a major 5% follow through buy signal however before the Trade the Cycles system indicates that a major cycle low has very likely occurred.

What's going on is that SPX/NDX/RUT will probably test the 9-18-08 cycle low that might/appears to be an important cycle low (SPX Wave A major intermediate term cycle low) in the next week or so, see http://stockcharts.com/charts/gallery.html?%24spx. Even if the 9-18-08 cycle low is an important cycle low, based on the nature of cycles, SPX/NDX/RUT should put in another cycle low modestly above 9-18's such that the new upcycle's uptrend line starts out relatively flat.

On 9-24 SPX/NDX/RUT probably entered a countertrend Wave B upcycle of a short term Wave 2 downcycle since 9-19-08 (if 9-18-08 was an important cycle low), see http://stockcharts.com/charts/gallery.html?%24spx, and, see
http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c.

The candle on 9-24 doesn't look like a short term Wave 2 cycle low, SPX/NDX/RUT should put in a cycle low only modestly above 9-18's based on the nature of cycles, and, reliable lead indicator WMT also appears to be in a countertrend type move right now, see http://stockcharts.com/charts/gallery.html?wmt.

SPX (S & P 500) on 9-18 (barring another major debacle) probably put in a very important Wave A major intermediate term (since 10-11-07) cycle low, see http://stockcharts.com/charts/gallery.html?%24spx, that's Wave A down of the Cyclical Bear Market since 10-11-07. Obviously, a flood of major bad news has been a huge factor recently.

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 (on 9-18-08).

At least waiting for a strong multi day short term Wave 1 upcycle (typically about 2 to 3 sessions) 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).

Waiting for a strong short term Wave 1 upcycle, then looking to go long (for holding overnight, one can obviously day trade the short term Wave 1 long) shortly after a short term Wave 2 downcycle (usually lasts about 1.5 to 3 sessions, and, does an Elliott Wave down up down pattern) bottoms is a sound strategy.

Watch WMT's downside gap at 61.13 (filled). WMT has an upside gap at 63.17 (filled) and SPX has one at 1305.31.

The three month (http://finance.yahoo.com/q/ta?s=%5EHUI&t=3m&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC) Walmart (WMT) Lead Indicator is extremely bullish, which is a sign that SPX/NDX/RUT were/are near an important cycle low.

VIX rose a very sharp +5.85% today 9-26 versus SPX rising a modest +0.34%, which is an unusually large +6.19% rise in fear (+5.85% + +0.34% = +6.19% rise in the SPX (S & P 500) wall of worry) that points to some significant weakness on Monday 9-29.

Since SPX (S & P 500) probably (questionable actually) 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 9-18-08) watch upside gaps at 1278.60, 1305.31, 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.

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/

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Thursday, September 25, 2008

A US/Worldwide Stock Market Crash Might Occur In The Next Few Weeks

A US/worldwide stock market crash might occur in the next few weeks, either due to a financial system breakdown or a seriously deteriorating economy. A crash would affect nearly all sectors, due largely to program selling, including the precious metals sector. NEM and FCX are in the lead program trading index SPX (S & P 500).

Look at today 9-25's economic data at http://biz.yahoo.com/c/e.html. New Home Sales were only 460,000 versus the expected 518,000 and the previous 520,000. Initial Jobless Claims were 493,000 versus the expected 450,000 and the previous 461,000. That's dramatic deterioration folks. I look at the economic data every day, and, it almost always comes in worse than expected, and, often comes in much worse than expected.

Even assuming that a massive bailout stops and begins to reverse the credit freeze, the US and world economy is in bad shape, and, is getting far worse. Some people say that we're (USA) not in a recession yet and cite Q2 GDP data. Well, take out government spending and the stimulus checks, THEN tell me what growth was. The private sector of the US economy has probably been in a recession since December 2007, if not earlier.

I'm not a gloom and doomer, that's just how it looks right now.

.......http://www.JoeFRocks.com/



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....."Managing the Bailout: He’d Do It for Nothing"

"Managing the Bailout: He’d Do It for Nothing," see http://www.nytimes.com/2008/09/25/business/economy/25pimco.html. Who else but Mr. Bonds, Bill Gross. Part of the article is below.

"NEWPORT BEACH, Calif. — One of the chief concerns about the Treasury Department’s $700 billion bailout plan is that the same Wall Street firms that helped create the crisis could make a killing cleaning it up.

William H. Gross, the manager of the country’s largest bond mutual fund, has a solution: he is offering to sort through the toxic assets — free.

“We have a large and brilliant staff that can analyze and has analyzed subprime mortgages that can help the Treasury out,” Mr. Gross, the co-chief investment officer for the Pacific Investment Management Company, said in an interview at the company’s headquarters here.

He added, “And I’d even be willing to say that if the Treasury wanted to use our help, it would come, you know, free and clear.”

Mr. Gross explained his offer as a philanthropic one. With Pimco’s $830 billion under management, “we make fees aplenty,” he said. That could be considered an understatement. Pimco is a behemoth in credit markets, and Mr. Gross talks about them with a confidence that reflects his ability to maneuver in them.

But maneuvering is becoming a lot harder these days. After breathing an initial sigh of relief when the Treasury plan was first announced, credit markets are again showing signs of stress.

Mr. Gross pointed it out on Tuesday morning, standing on Pimco’s trading floor as
Henry M. Paulson Jr., the Treasury secretary, and Ben S. Bernanke, the Federal Reserve chairman, testified before a Senate committee.

“Today’s the worst day yet and nobody knows it,” he said. “Everybody is squirreling away cash. Even the big banks are refusing to lend money.”

Bid-ask spreads on bonds in almost every sector of the debt markets stretched to a full point or more. “It’s not a pretty situation today, much worse than last week,” Mr. Gross said.

“Those who just look at the stock market wouldn’t know it,” he added, because the Dow Jones industrial average was down only 126 points at the time. “But the credit markets are doing a pretty good job of freezing up.”

Despite his proposal to offer his talents, gratis, some investment managers say the government should be wary of giving authority for the auction of mortgage securities to anyone in the private sector, particularly someone with as dominant a position in the bond market as Mr. Gross.

Luis Maizel, a senior managing director of LM Capital Group in San Diego, said the government should instead turn to someone like a former official of the Federal Home Loan Bank Board, which is now defunct, or the Federal Reserve.

“They should start with somebody who doesn’t have a conflict,” Mr. Maizel said. “Bill Gross is a good friend of mine, but if you put this in Bill’s hands, Pimco is going to come out great and I don’t know that the government will.”

Mr. Gross says that all he wants in return for helping the Treasury Department is for Pimco “to be recognized for the way we’ve seen this crisis coming, and for the way we’ve talked about what’s required.”

For more than a year, Mr. Gross, whose investment expertise has earned him a net worth estimated at more than $1 billion, according to Forbes, has indeed played the role of the financial markets’ Cassandra. Beginning in July 2007, he warned that the subprime mortgage crisis would become far worse before it would improve.

Other sectors of the financial markets, he predicted, also could seize up if the Federal Reserve and the Treasury did not do something to help keep the markets liquid.

But Mr. Gross and Pimco also attracted criticism when it became clear that the Pimco Total Return fund earned more than $1.7 billion on the day the federal government bailed out Fannie Mae and Freddie Mac."

.......http://www.JoeFRocks.com/

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It Looks Like GDX (Gold Miners ETF) Will Fill It's Downside Gap At 35.20

It looks like GDX (Gold Miners ETF) will probably fill it's downside gap at 35.20 today or tomorrow as expected, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=. GDX's cycle low at 36.05 so far today is probably a Wave A type cycle low, not the final very short term Wave C cycle low. 35.20 could obviously end up being a bullish breakaway gap also, but, probably not.

The sector NEM Lead Indicator is extremely bullish right now (which is bearish very short term), see http://finance.yahoo.com/q/ta?s=^XAU&t=1d&l=on&z=m&q=l&p=&a=&c=^hui,nem, and, the broad market Walmart (WMT) Lead Indicator is modestly bearish right now, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC.

I'm looking to day trade short AEM (60.94 downside gap) or HMY (9.38 downside gap) right now. Once GDX/HUI/XAU hit a very short term cycle low, probably shortly after GDX fills it's downside gap at 35.20, I'll look to trade AEM or FCX long. Not a recommendation, do your own due diligence.

FCX (http://stockcharts.com/charts/gallery.html?fcx) appears to have bottomed/hit a short term Wave 2 cycle low today 9-25 at 64.75, see http://finance.yahoo.com/q/ta?s=fcx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, completing a 2+ day Elliott Wave ABC down up down short term Wave 2 downcycle. Not a recommendation, do your own due diligence.

As I've discussed in recent days there should be, based on the nature of cycles, a huge final Wave 5 GDX/HUI/XAU (http://stockcharts.com/charts/gallery.html?gdx) spike move, once the current downside gap filling action is completed today or tomorrow. The short term Wave 1 upcycle since 9-11-08 has been a monster, so, based on the nature of cycles, the huge final Wave 5 GDX/HUI/XAU spike move should be a monster.

This obviously assumes that GDX/HUI/XAU's (http://stockcharts.com/charts/gallery.html?gdx) monster short term Wave 1 upcycle since 9-11-08 didn't peak yet/on 9-22-08. The candles on 9-22 are bullish/white (close above the open), and, don't have the usual large bearish spike that tends to mark important cycle highs, so, the monster GDX/HUI/XAU short term Wave 1 upcycle since 9-11-08 probably remains in effect.

The NEM Lead Indicator turned extremely bullish today (about +2.30% versus the XAU right now), so, the huge final Wave 5 spike move scenario appears likely. Got cycles?

The Double Long Gold ETN (Exchange Traded Note) DGP should be a good trade for gold's final spike move of the monster short term Wave 1 upcycle since 9-11-08. Not a recommendation, do your own due diligence.

.......http://www.JoeFRocks.com/

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Wednesday, September 24, 2008

Reliable Lead Indicator NEM Filled It's Downside Gap At 41.85

Reliable lead indicator NEM filled it's downside gap at 41.85 late today 9-24, see http://finance.yahoo.com/q/ta?s=nem&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c, leading the way as usual.

GDX (Gold Miners ETF, http://stockcharts.com/charts/gallery.html?gdx) will probably fill it's downside gap at 35.20 tomorrow or Friday, GLD (Gold ETF) will probably fill 85.98, AEM will probably fill it's downside gap at 60.94, and, HMY will probably fill it's downside gap at 9.38. All of those gaps were created at 9-22's open.

The intraday sector NEM Lead Indicator (closed at a very bearish -1.80% versus the XAU today 9-24) was bearish or very bearish today, and, tended to get more bearish as the session progressed, see http://finance.yahoo.com/q/ta?s=^XAU&t=1d&l=on&z=m&q=l&p=&a=&c=^hui,nem.

Today 9-24's bullish intraday broad market Walmart (WMT) Lead Indicator (closed at a very bullish +1.09% versus SPX (S & P 500)), see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC, explains why, despite a very bearish sector NEM Lead Indicator today (closed at -1.80% versus the XAU today 9-24), the GDX/HUI/XAU downtrend was relatively flat today.

I tried to short GDX (Gold Miners ETF) late today, but, it wasn't available for short selling, which is the first time that's happened to me. It's obviously a weird time right now for short selling, with many financial stocks banned from short selling, and, many more aren't shortable at a broker's discretion.

It's insanity, because, short selling is simply the exact opposite of trading long. Someone is just as likely to be covering a short position as they are to be entering a short position. Also, short selling adds liquidity (trading volume) to the market.

So, part of the GDX/HUI/XAU scenario discussed yesterday 9-23 appears to be unfolding, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c. The long relatively flat downtrend (see the 5 day intraday candlestick chart at the link above) since late on 9-22 points to a sharp decline, because, it's probably the relatively flat segment of a large very short term downcycle.

Early tomorrow 9-25 I'll look to day trade short HMY (Harmony Gold, http://stockcharts.com/charts/gallery.html?hmy, downside gap at 9.38 from 9-22's open, in Wave C of a Cyclical Bear Market since mid 2002!, see http://finance.yahoo.com/q/ta?s=HMY&t=my&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c), see http://finance.yahoo.com/q/ta?s=hmy&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c. Note the large bearish spike on 9-22 just before the close, and, there were a few large bearish spikes early today 9-24. Like GDX/HUI/XAU HMY has a relatively flat downtrend since late on 9-22, and, looks like it'll try and probably succeed in filling it's downside gap at 9.38 from 9-22's open in the next day or two.

GDX/HUI/XAU created large bullish gaps at 9-22's open, that are now downside gaps at 35.20, 323.74, and 139.39, see GDX's 5 day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. Reliable lead indicator NEM gapped up from 41.85, and, the gold ETF GLD up from 85.98.

What's going on is that SPX/NDX/RUT will probably test the 9-18-08 cycle low that might/appears to be an important cycle low (SPX Wave A major intermediate term cycle low), see http://stockcharts.com/charts/gallery.html?%24spx. Even if the 9-18-08 cycle low is an important cycle low, based on the nature of cycles, SPX/NDX/RUT should put in another cycle low modestly above 9-18's such that the new upcycle's uptrend line starts out relatively flat.

It looks like SPX/NDX/RUT will continue to plunge early tomorrow, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c, along with GDX/HUI/XAU/NEM/GLD, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c.

NEM and FCX are in the S & P 500 (SPX). Basically, due to likely massive program selling, nearly all sectors (in the lead program trading index SPX) and therefore indexes will probably be weak early tomorrow. That's the bad news.

The good news is that a great day trading (maybe/probably overnight also) opportunity will probably arise tomorrow or Friday for gold bugs, even if 9-22's downside gaps get filled tomorrow or Friday (likely), because, the final large (probably huge in this case, because, the short term Wave 1 upcycle since 9-11-08 has been a monster) blowoff spike move (Wave 5 of Wave 5 of the short term Wave 1 upcycle) probably didn't occur yet, see http://stockcharts.com/charts/gallery.html?%24xau.

9-22's GDX/HUI/XAU candles are bullish/white, indicating a close above the open, and, there isn't the large bearish spike that tends to mark important cycle highs. I'll be watching AEM's downside gap at 60.94, HMY's at 9.38, and, GDX's at 35.20 tomorrow, all from 9-22's open.

GDX/HUI/XAU are probably still in the third/final Wave 5 of the monster Short Term Wave 1 Upcycle that began on 9-11-08, see http://stockcharts.com/charts/gallery.html?gdx. Note that GDX (Gold Miners ETF) has done an up down up down up pattern since 9-11-08's likely Wave A major intermediate term cycle low, which is Wave A down of the likely Wave 2 Cyclical Bear Market since 3-17-08 (3-14-08 for the XAU).

It looks like GDX (Gold Miners ETF) will probably fill it's upside gap at 38.92 in the next week or so, then, probably a Short Term Wave 1 (since 9-11) cycle high will occur shortly thereafter. Obviously, watching GDX's upside gap at 38.92 is very important.

Gold/GLD probably didn't peak on 9-18 as previously thought, see http://stockcharts.com/charts/gallery.html?gld, despite 9-18's huge extremely bearish spike, 9-18 is probably a Wave 3 cycle high of the short term countertrend Wave B upcycle since 9-11-08.

The 5 day sector NEM Lead Indicator is off the charts bearish right now (-1.80% versus the XAU today/on 9-24, -0.67% on 9-23, -1.18% on 9-22, -0.17% on 9-19, -7.96% on 9-18, +0.81% on 9-17, +0.95% on 9-16), see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem.

The 5 day broad market WMT (Walmart) Lead Indicator, used in concert with the sector lead indicator, is extremely bearish right now (+1.09% versus the S & P 500 (SPX) today/on 9-24, +0.73% on 9-23, +2.46% on 9-22, -6.93% on 9-19, -1.23% on 9-18, +0.69% on 9-17, -0.92% on 9-16), 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.

Given the monster spike move by both gold stocks/GDX/HUI/XAU and gold/GLD since 9-11-08, the off the charts bearish NEM/WMT Lead Indicators, and, the fact that gold/GLD probably didn't bottom on 9-11-08, this (once the short term Wave 1 upcycle since 9-11-08 peaks in a week or so) will be one of the best gold sector shorting opportunities I've ever seen (NOT a recommendation, I don't provide recommendations, I provide market timing info, that's all, YOU make your OWN decisions. Obviously, volatility is off the charts now).

A great GDX (Gold Miners ETF) and GLD (Gold ETF) short selling opportunity should arise in a week or so, when the short term Wave 1 upcycle since 9-11-08 peaks.

Typically I'll wait for a significant intraday Wave A type plunge, and, I carefully check the Elliott Wave count on the 5 day intraday candlestick charts (GDX/HUI/XAU/NEM and whatever I'm trading), as well as the NEM/WMT Lead Indicators, then I'll go short late in an intraday countertrend Wave B rebound or (probably) early in Wave C down. Large spikes tend to occur at or near important cycles highs on both the intraday and daily candlestick charts, so, I look for that also.

When the NEM and WMT Lead Indicators strongly agree the best trading opportunities tend to occur, so, the short selling opportunity that'll very likely occur next week should be a great one for gold/GLD/GDX (and probably Harmony Gold (HMY)), see http://stockcharts.com/charts/gallery.html?gld.

Since gold/GLD (http://stockcharts.com/charts/gallery.html?gld) experienced extremely high volatility recently, which is what occurs at important cycle highs/lows, and, gold/GLD's cycle low on 9-11-08 lacks the usual bullish large inverse spike that tends to mark important cycle lows, plus the fact that gold/GLD tend to lag gold stocks/GDX/HUI/XAU, means that the short term cycle high that should occur next week for gold/GLD will probably be a countertrend Wave B cycle high of Wave C (since 7-15-08) of the Wave A major intermediate term downcycle since 3-17-08. GDX/HUI/XAU probably entered a countertrend Wave B major intermediate term upcycle on 9-11-08.

Reliable lead indicator NEM created a bearish breakaway gap at 44.71 on 8-8 (filled), GDX created one at 38.92, HUI created one at 356.72 (filled 9-22), and, GLD created one at 86.09 (filled). Upside gaps were created on 7-23 at 47 for GDX (filled 9-22), 432.50 for HUI, 185.04 for the XAU, and, at 93.06 (filled 9-17) for GLD.

See SPX (S & P 500) at http://stockcharts.com/charts/gallery.html?%24spx)/SPX.

An SPX Wave A major intermediate term cycle low appears to/might have occurred on 9-18, barring another major debacle in the next few days. SPX needs to hit a major 5% follow through buy signal before the Trade the Cycles system indicates that a major cycle low has very likely occurred. Note the large bullish inverse spike on 9-18's candle.

SPX created a bullish breakaway gap at 1206.51 at 9-19's open that got filled on 9-22, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

The huge gold sector spiking action recently has "countertrend" written all over it (from an intermediate term cycle point of view for GDX/HUI/XAU, not short term, though probably short term for gold/GLD). Countertrend action tends to be much more vertical/spiking type action than the action that occurs in normal upcycles.

GDX/HUI/XAU (http://stockcharts.com/charts/gallery.html?gdx) are very likely in a countertrend Wave B major intermediate term upcycle since 9-11-08, which is the Wave B upcycle of the likely Wave 2 Cyclical Bear Market since mid March 2008.

GDX/HUI/XAU (http://stockcharts.com/charts/gallery.html?gdx, gold/GLD lags and silver lags gold) probably finally put in a Wave A major intermediate term (since mid March, Wave A down of the Wave 2 Cyclical Bear Market) cycle low on 9-11-08.

Before holding positions overnight one obviously should wait for a strong/major 5% follow through buy signal (Wave 1 monthly upcycle, or, maybe a 5% major buy signal will occur after a Wave 3 short term upcycle, or, maybe after a very strong short term Wave 1 upcycle), then look to go long after a Wave 2 monthly downcycle or maybe after a short term Wave 4 downcycle (of a monthly upcycle), or, even after short term Wave 2 downcycle, if a very strong short term Wave 1 upcycle occurred.

Tuesday 9-9's extremely high GDX/HUI/XAU volatility is what tends to/almost always occurs near important cycle lows and cycle highs, so, 9-9's extremely high volatility indicated that an important cycle low was probably imminent/probably occurred on 9-11, as does the cycle picture and the Elliott Wave count, see annotated chart two at http://www.joefrocks.com/GoldStockCharts.html.

GDX/HUI/XAU and NEM created large bullish breakaway gaps at 9-12's open (downside gaps at 28.20, 262.97, 115.32, 37.28, GLD at 73.08), see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

Reliable lead indicator NEM has the most bullish/large inverse spike on a bullish white (close above the open) candle on 9-11-08, see http://stockcharts.com/charts/gallery.html?nem. NEM closed at 37.28 on 9-11 (session cycle high at 38), well above the session cycle low and potential Cyclical Bear Market (since 1-31-06) cycle low at 35.79.

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.

There are a lot of gold/silver stocks that have been crushed (as most of you know) and will probably soon (or already have) enter a Cyclical Bull Market. A few examples are AEM (hit a 5% major buy signal, and, appears to have entered a Wave 5 Cyclical Bull Market on 9-11-08), CDE, and NXG. I'll try to remember to point many of them out in the next few days/weeks.

The US Dollar entered a Wave 3 Minor Intermediate Term Upcycle on 7-15-08, see http://stockcharts.com/charts/gallery.html?%24usd, and, entered a Cyclical Bull Market within a Secular Bear Market on 3-17-08, after putting in a cycle low at 70.698. Note the very large bullish inverse spike on 3-17-08's and 7-15-08's candle.
The US Dollar hit a 5% major buy signal! (major breakout), see http://tradethecycles.blogspot.com/2008/08/us-dollar-hit-5-follow-through-major.html.

The coal ETF KOL (http://stockcharts.com/charts/gallery.html?kol) appears to have put in a Wave A major intermediate term cycle low on 9-16. It needs to hit a major 5% follow through buy signal however before the Trade the Cycles system indicates that a major cycle low has very likely occurred.

SPX (S & P 500) on 9-18 (barring another major debacle) probably put in a very important Wave A major intermediate term (since 10-11-07) cycle low, see http://stockcharts.com/charts/gallery.html?%24spx, that's Wave A down of the Cyclical Bear Market since 10-11-07. Obviously, a flood of major bad news has been a huge factor recently.

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 (on 9-18-08).

At least waiting for a strong multi day short term Wave 1 upcycle (typically about 2 to 3 sessions) 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).

Waiting for a strong short term Wave 1 upcycle, then looking to go long (for holding overnight, one can obviously day trade the short term Wave 1 long) shortly after a short term Wave 2 downcycle (usually lasts about 1.5 to 3 sessions, and, does an Elliott Wave down up down pattern) bottoms is a sound strategy.

Watch WMT's downside gap at 61.13 (filled). WMT has an upside gap at 63.17 (filled) and SPX has one at 1305.31.

The three month (http://finance.yahoo.com/q/ta?s=%5EHUI&t=3m&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC) Walmart (WMT) Lead Indicator is extremely bullish, which is a sign that SPX/NDX/RUT were/are near an important cycle low.

VIX fell a significant -1.48% today 9-24 versus SPX falling a slight -0.20%, which is a significant +1.68% rise in complacency (-1.48% + -0.20% = -1.68% decline in the SPX (S & P 500) wall of worry) that points to some significant weakness on Thursday 9-25.

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 9-18-08) watch upside gaps at 1278.60, 1305.31, 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.

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/

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I'm Looking To Day Trade GDX (Gold Miners ETF) Short Right Now

I'm looking to day trade GDX (Gold Miners ETF, http://stockcharts.com/charts/gallery.html?gdx) short right now, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c. It looks like I'll try to short it at 37.95ish versus a likely session cycle high at 38.07.

The GDX decline from late 9-22 until late yesterday 9-23 is a likely Wave A down type move. The rebound since late yesterday 9-23, that appears to have peaked early today, was a likely countertrend Wave B up type move. So, GDX appears to have entered a Wave C down type move, in which it'll probably at least try and will probably succeed in filling it's downside gap at 35.20 from 9-22, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=.

The very bearish intraday NEM Lead Indicator right now is an obvious sign to look to short, see http://finance.yahoo.com/q/ta?s=^XAU&t=1d&l=on&z=m&q=l&p=&a=&c=^hui,nem.

I'd rather short HMY (Harmony Gold, downside gap at 9.38 from 9-22), see http://finance.yahoo.com/q/ta?s=hmy&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, but, it's thinly traded so far today versus it's average daily volume, so, I'm avoiding it right now. It's a relatively low priced stock, so, that makes today's volume so far a bit light/thin. One wants strong volume/liquidity (especially) when trading substantial positions.

.......http://www.JoeFRocks.com/

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Tuesday, September 23, 2008

GDX/HUI/XAU Will Probably Try To Fill Yesterday 9-22's Downside Gaps Early Tomorrow

GDX/HUI/XAU/NEM/GLD (http://stockcharts.com/charts/gallery.html?%24xau) will probably try to fill yesterday 9-22's downside gaps early tomorrow, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=.

GDX/HUI/XAU created large bullish gaps at yesterday 9-22's open, that are now downside gaps at 35.20, 323.74, and 139.39, see GDX's 5 day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. Reliable lead indicator NEM gapped up from 41.85, and, the gold ETF GLD up from 85.98.

What's going on is that SPX/NDX/RUT will probably test the 9-18-08 cycle low that might/appears to be an important cycle low (SPX Wave A major intermediate term cycle low), see http://stockcharts.com/charts/gallery.html?%24spx. Even if the 9-18-08 cycle low is an important cycle low, based on the nature of cycles, SPX/NDX/RUT should put in another cycle low modestly above 9-18's such that the new upcycle's uptrend line starts out relatively flat.

It looks like SPX/NDX/RUT will continue to plunge early tomorrow, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c, along with GDX/HUI/XAU/NEM/GLD, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c.

NEM and FCX are in the S & P 500 (SPX). Basically, due to likely massive program selling, nearly all sectors (in the lead program trading index SPX) and therefore indexes will probably be weak early tomorrow. That's the bad news.

The good news is that a great day trading (maybe/probably overnight also) opportunity will probably arise early tomorrow 9-24 for gold bugs, even if 9-22's downside gaps get filled early tomorrow (likely), because, the final large (probably huge in this case, because, the short term Wave 1 upcycle since 9-11-08 has been a monster) blowoff spike move (Wave 5 of Wave 5 of the short term Wave 1 upcycle) probably didn't occur yet, see http://stockcharts.com/charts/gallery.html?%24xau. Yesterday 9-22's GDX/HUI/XAU candles are bullish/white, indicating a close above the open, and, there isn't the large bearish spike that tends to mark important cycle highs.

I'll be watching AEM's downside gap at 60.94, HMY's at 9.38, and, GDX's at 35.20, all from 9-22's open early tomorrow. I'll also watch NEM's at 41.85 from 9-22's open. I might day trade HMY or GDX short early tomorrow, if I can get a good entry point (the decline might be vertical and rapid). Once AEM clearly fills 60.94 (likely) or clearly fails to do so I'll look to day trade it long. I probably won't hold it long overnight (maybe a modest position overnight).

GDX/HUI/XAU are probably still in the third/final Wave 5 of the monster Short Term Wave 1 Upcycle that began on 9-11-08, see http://stockcharts.com/charts/gallery.html?gdx. Note that GDX (Gold Miners ETF) has done an up down up down up pattern since 9-11-08's likely Wave A major intermediate term cycle low, which is Wave A down of the likely Wave 2 Cyclical Bear Market since 3-17-08 (3-14-08 for the XAU).

It looks like GDX (Gold Miners ETF) will probably fill it's upside gap at 38.92 in the next few days, then, probably a Short Term Wave 1 (since 9-11) cycle high will occur shortly thereafter. Obviously, watching GDX's upside gap at 38.92 is very important.

Gold/GLD probably didn't peak on 9-18 as previously thought, see http://stockcharts.com/charts/gallery.html?gld, despite 9-18's huge extremely bearish spike, 9-18 is probably a Wave 3 cycle high of the short term countertrend Wave B upcycle since 9-11-08.

The 5 day sector NEM Lead Indicator is off the charts bearish right now (-0.67% versus the XAU today/on 9-23, -1.18% on 9-22, -0.17% on 9-19, -7.96% on 9-18, +0.81% on 9-17, +0.95% on 9-16), see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem.

The 5 day broad market WMT (Walmart) Lead Indicator, used in concert with the sector lead indicator, is extremely bearish right now (+0.73% versus the S & P 500 (SPX) today/on 9-23, +2.46% on 9-22, -6.93% on 9-19, -1.23% on 9-18, +0.69% on 9-17, -0.92% on 9-16), 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.

Given the monster spike move by both gold stocks/GDX/HUI/XAU and gold/GLD since 9-11-08, the off the charts bearish NEM/WMT Lead Indicators, and, the fact that gold/GLD probably didn't bottom on 9-11-08, as discussed Friday 9-19, this (once the short term Wave 1 upcycle since 9-11-08 peaks in a few days) will be one of the best gold sector shorting opportunities I've ever seen (NOT a recommendation, I don't provide recommendations, I provide market timing info, that's all, YOU make your OWN decisions. Obviously, volatility is off the charts now).

A great GDX (Gold Miners ETF) and GLD (Gold ETF) short selling opportunity should arise in a few days when the short term Wave 1 upcycle since 9-11-08 peaks.

Typically I'll wait for a significant intraday Wave A type plunge, and, I carefully check the Elliott Wave count on the 5 day intraday candlestick charts (GDX/HUI/XAU/NEM and whatever I'm trading), as well as the NEM/WMT Lead Indicators, then I'll go short late in an intraday countertrend Wave B rebound or (probably) early in Wave C down. Large spikes tend to occur at or near important cycles highs on both the intraday and daily candlestick charts, so, I look for that also.

When the NEM and WMT Lead Indicators strongly agree the best trading opportunities tend to occur, so, the short selling opportunity that'll very likely occur this week should be a great one for gold/GLD/GDX (and probably Harmony Gold (HMY)), see http://stockcharts.com/charts/gallery.html?gld.

Since gold/GLD (http://stockcharts.com/charts/gallery.html?gld) experienced extremely high volatility recently, which is what occurs at important cycle highs/lows, and, gold/GLD's cycle low on 9-11-08 lacks the usual bullish large inverse spike that tends to mark important cycle lows, plus the fact that gold/GLD tend to lag gold stocks/GDX/HUI/XAU, means that the short term cycle high that should occur this week for gold/GLD will probably be a countertrend Wave B cycle high of Wave C (since 7-15-08) of the Wave A major intermediate term downcycle since 3-17-08. GDX/HUI/XAU probably entered a countertrend Wave B major intermediate term upcycle on 9-11-08.

On Wednesday early on I'll be very carefully looking to day trade short Harmony Gold (HMY, downside gap at 9.38 from yesterday 9-22's open, in Wave C of a Cyclical Bear Market since mid 2002!, see http://finance.yahoo.com/q/ta?s=HMY&t=my&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c) or GDX (Gold Miners ETF), and, I'll be looking to (maybe) "double short" gold via DZZ.

Reliable lead indicator NEM created a bearish breakaway gap at 44.71 on 8-8 (filled), GDX created one at 38.92, HUI created one at 356.72 (filled 9-22), and, GLD created one at 86.09 (filled). Upside gaps were created on 7-23 at 47 for GDX (filled 9-22), 432.50 for HUI, 185.04 for the XAU, and, at 93.06 (filled 9-17) for GLD.

See SPX (S & P 500) at http://stockcharts.com/charts/gallery.html?%24spx)/SPX. An SPX Wave A major intermediate term cycle low appears to have occurred on 9-18, barring another major debacle in the next few days. SPX needs to hit a major 5% follow through buy signal before the Trade the Cycles system indicates that a major cycle low has very likely occurred. Note the large bullish inverse spike on 9-18's candle.

SPX created a bullish breakaway gap at 1206.51 at 9-19's open that got filled on 9-22, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

The huge gold sector spiking action recently has "countertrend" written all over it (from an intermediate term cycle point of view for GDX/HUI/XAU, not short term, though probably short term for gold/GLD). Countertrend action tends to be much more vertical/spiking type action than the action that occurs in normal upcycles. GDX/HUI/XAU (http://stockcharts.com/charts/gallery.html?gdx) are very likely in a countertrend Wave B major intermediate term upcycle since 9-11-08, which is the Wave B upcycle of the likely Wave 2 Cyclical Bear Market since mid March 2008.

The coal ETF KOL (http://stockcharts.com/charts/gallery.html?kol) appears to have put in a Wave A major intermediate term cycle low on 9-16. It needs to hit a major 5% follow through buy signal however before the Trade the Cycles system indicates that a major cycle low has very likely occurred.

GDX/HUI/XAU (http://stockcharts.com/charts/gallery.html?gdx, gold/GLD lags and silver lags gold) probably finally put in a Wave A major intermediate term (since mid March, Wave A down of the Wave 2 Cyclical Bear Market) cycle low on 9-11-08.

Before holding positions overnight one obviously should wait for a strong/major 5% follow through buy signal (Wave 1 monthly upcycle, or, maybe a 5% major buy signal will occur after a Wave 3 short term upcycle, or, maybe after a very strong short term Wave 1 upcycle), then look to go long after a Wave 2 monthly downcycle or maybe after a short term Wave 4 downcycle (of a monthly upcycle), or, even after short term Wave 2 downcycle, if a very strong short term Wave 1 upcycle occurred.

Tuesday 9-9's extremely high GDX/HUI/XAU volatility is what tends to/almost always occurs near important cycle lows and cycle highs, so, 9-9's extremely high volatility indicated that an important cycle low was probably imminent/probably occurred on 9-11, as does the cycle picture and the Elliott Wave count, see annotated chart two at http://www.joefrocks.com/GoldStockCharts.html.

GDX/HUI/XAU and NEM created large bullish breakaway gaps at 9-12's open (downside gaps at 28.20, 262.97, 115.32, 37.28, GLD at 73.08), see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

Reliable lead indicator NEM has the most bullish/large inverse spike on a bullish white (close above the open) candle on 9-11-08, see http://stockcharts.com/charts/gallery.html?nem. NEM closed at 37.28 on 9-11 (session cycle high at 38), well above the session cycle low and potential Cyclical Bear Market (since 1-31-06) cycle low at 35.79.

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.

There are a lot of gold/silver stocks that have been crushed (as most of you know) and will probably soon (or already have) enter a Cyclical Bull Market. A few examples are AEM (hit a 5% major buy signal, and, appears to have entered a Wave 5 Cyclical Bull Market on 9-11-08), CDE, and NXG. I'll try to remember to point many of them out in the next few days/weeks.

The US Dollar entered a Wave 3 Minor Intermediate Term Upcycle on 7-15-08, see http://stockcharts.com/charts/gallery.html?%24usd, and, entered a Cyclical Bull Market within a Secular Bear Market on 3-17-08, after putting in a cycle low at 70.698. Note the very large bullish inverse spike on 3-17-08's and 7-15-08's candle.

The US Dollar hit a 5% major buy signal! (major breakout), see http://tradethecycles.blogspot.com/2008/08/us-dollar-hit-5-follow-through-major.html.

SPX (S & P 500) on 9-18 (barring another major debacle) probably put in a very important Wave A major intermediate term (since 10-11-07) cycle low, see http://stockcharts.com/charts/gallery.html?%24spx, that's Wave A down of the Cyclical Bear Market since 10-11-07. Obviously, a flood of major bad news has been a huge factor recently.

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 (on 9-18-08).

At least waiting for a strong multi day short term Wave 1 upcycle (typically about 2 to 3 sessions) 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).

Waiting for a strong short term Wave 1 upcycle, then looking to go long (for holding overnight, one can obviously day trade the short term Wave 1 long) shortly after a short term Wave 2 downcycle (usually lasts about 1.5 to 3 sessions, and, does an Elliott Wave down up down pattern) bottoms is a sound strategy.

Watch WMT's downside gap at 61.13 (filled). WMT has an upside gap at 63.17 (filled) and SPX has one at 1305.31.

The three month (http://finance.yahoo.com/q/ta?s=%5EHUI&t=3m&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC) Walmart (WMT) Lead Indicator is extremely bullish, which is a sign that SPX/NDX/RUT were/are near an important cycle low.

VIX rose a very sharp +5.20% today 9-23 versus SPX falling a significant -1.56%, which is a very sharp +3.64% rise in fear (+5.20% + -1.56% = +3.64% rise in the SPX (S & P 500) wall of worry) that points to some very sharp strength on Wednesday 9-24, after likely early weakness.

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 9-18-08) watch upside gaps at 1278.60, 1305.31, 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.

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/

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