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/
NEM XAU HUI
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/
NEM XAU HUI
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
1:30 PM
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