The Major Averages Appear To Have Bottomed
Upside gaps from today 9-16's open that needed to get filled to confirm the bullish case got filled today, see GDX (Gold Miners ETF, http://stockcharts.com/charts/gallery.html?gdx) at http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, and, see SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) at http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=.
SPX (S & P 500) appears to have put in a very important Wave A major intermediate term (since 10-11-07) cycle low today, see http://stockcharts.com/charts/gallery.html?%24spx, that's Wave A down of the Cyclical Bear Market since 10-11-07. Note the very large very bullish inverse spike on today 9-16's candle.
SPX's extreme volatility yesterday (-4.714% on 9-15-08), plus the Elliott Wave patterns since the 8-11-08 monthly cycle high (SPX was in Wave C of Wave C until very early today, see http://stockcharts.com/charts/gallery.html?%24spx), suggested that the S & P 500 (SPX) might put in a Wave A major intermediate term cycle low today 9-16-08. Extreme volatility almost always occurs very near or at important cycle lows or cycle highs.
Watch NEM's upside gap at 39.82 from 9-9 tomorrow.
AEM (http://stockcharts.com/charts/gallery.html?aem) and the coal ETF KOL (http://stockcharts.com/charts/gallery.html?kol) filled today's upside gaps at 51.15 and 31.78, so, I'll look to trade them long after they pull back tomorrow. KOL appears to have put in a Wave A major intermediate term cycle low today. I'll also look to trade the Russell 2000 (RUT) ultra long via UWM and I'll look to trade PAL (North American Palladium) long after they pull back tomorrow.
Both the five day sector NEM Lead Indicator (+0.95% versus the XAU today/on 9-16, +2.86% on 9-15), see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem, and, the five day broad market Walmart (WMT) Lead Indicator (-0.92% versus SPX today/on 9-16, +3.40% on 9-15, -1.41% on 9-12, +0.47% on 9-11, +0.84% on 9-10, +2.01% on 9-9, +0.02% on 9-8, +1.17% on 9-5, +2.97% on 9-4, +0.44% on 9-3, +1.39% on 9-2), at 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, jive with trading long tomorrow.
Yesterday 9-15's GDX/HUI/XAU (http://stockcharts.com/charts/gallery.html?gdx) mini crash was probably Wave 4 down of a Short Term Wave 1 Upcycle since early on 9-11-08 (likely Wave A Major Intermediate Term (since mid March) cycle low), see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=.
GDX/HUI/XAU did an up down up down pattern from early on 9-11 to late 9-15, and, entered Wave 5 of a Short Term Wave 1 Upcycle late on 9-15, because, they put in a cycle low shortly before session's end on 9-15 modestly above where the Wave 4 cycle low appears to have occurred.
Very strong likely Wave 1 type moves have occurred since 9-11-08. 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.
Due to the nature of cycles, upcycles' rising bottoms trendlines almost always begin relatively flat, so, SPX (RUT, NDX, and KOL etc) should put in a cycle low on Wednesday or Thursday only modestly above today 9-16's cycle low.
The three month sector NEM Lead Indicator (http://finance.yahoo.com/q/ta?s=%5EXAU&t=3m&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem) is extremely bullish, which is another sign that GDX/HUI/XAU/GLD and reliable lead indicator NEM were probably very near an important cycle low.
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) broad market Walmart (WMT) Lead Indicator, used in concert with the sector NEM Lead Indicator, is extremely bullish, which is another sign that GDX/HUI/XAU/GLD and reliable lead indicator NEM were probably very near an important cycle low.
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.
Upside gaps were created at 9-2's open at 37.64 for GDX, at 45.10 for NEM (also watch 46.12), and, at 81.71 for GLD, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.
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 enter a Cyclical Bull Market. A few examples are 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.
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, and, GLD created one at 86.09. Upside gaps were created on 7-23 at 47 for GDX, 432.50 for HUI, 185.04 for the XAU, and, at 93.06 for GLD.
SPX appears to have put in a very important Wave A major intermediate term cycle low today, see http://stockcharts.com/charts/gallery.html?%24spx, that's Wave A down of the Cyclical Bear Market since 10-11-07. Note the very large very bullish inverse spike on today 9-16's candle.
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 9-16-08).
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 (createded 9-10). WMT has an upside gap at 63.17 (created 9-12) 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 are/were near an important cycle low.
VIX fell a very sharp -3.85% today 9-16 versus SPX rising a significant +1.75%, which is a sharp +2.10% rise in complacency (-3.85% + +1.75% = -2.10% decline in the SPX (S & P 500) wall of worry) that points to some severe weakness early on Wednesday 9-17.
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 9-16-08) 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
SPX (S & P 500) appears to have put in a very important Wave A major intermediate term (since 10-11-07) cycle low today, see http://stockcharts.com/charts/gallery.html?%24spx, that's Wave A down of the Cyclical Bear Market since 10-11-07. Note the very large very bullish inverse spike on today 9-16's candle.
SPX's extreme volatility yesterday (-4.714% on 9-15-08), plus the Elliott Wave patterns since the 8-11-08 monthly cycle high (SPX was in Wave C of Wave C until very early today, see http://stockcharts.com/charts/gallery.html?%24spx), suggested that the S & P 500 (SPX) might put in a Wave A major intermediate term cycle low today 9-16-08. Extreme volatility almost always occurs very near or at important cycle lows or cycle highs.
Watch NEM's upside gap at 39.82 from 9-9 tomorrow.
AEM (http://stockcharts.com/charts/gallery.html?aem) and the coal ETF KOL (http://stockcharts.com/charts/gallery.html?kol) filled today's upside gaps at 51.15 and 31.78, so, I'll look to trade them long after they pull back tomorrow. KOL appears to have put in a Wave A major intermediate term cycle low today. I'll also look to trade the Russell 2000 (RUT) ultra long via UWM and I'll look to trade PAL (North American Palladium) long after they pull back tomorrow.
Both the five day sector NEM Lead Indicator (+0.95% versus the XAU today/on 9-16, +2.86% on 9-15), see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=off&z=l&q=l&p=&a=&c=%5Ehui,nem, and, the five day broad market Walmart (WMT) Lead Indicator (-0.92% versus SPX today/on 9-16, +3.40% on 9-15, -1.41% on 9-12, +0.47% on 9-11, +0.84% on 9-10, +2.01% on 9-9, +0.02% on 9-8, +1.17% on 9-5, +2.97% on 9-4, +0.44% on 9-3, +1.39% on 9-2), at 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, jive with trading long tomorrow.
Yesterday 9-15's GDX/HUI/XAU (http://stockcharts.com/charts/gallery.html?gdx) mini crash was probably Wave 4 down of a Short Term Wave 1 Upcycle since early on 9-11-08 (likely Wave A Major Intermediate Term (since mid March) cycle low), see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=.
GDX/HUI/XAU did an up down up down pattern from early on 9-11 to late 9-15, and, entered Wave 5 of a Short Term Wave 1 Upcycle late on 9-15, because, they put in a cycle low shortly before session's end on 9-15 modestly above where the Wave 4 cycle low appears to have occurred.
Very strong likely Wave 1 type moves have occurred since 9-11-08. 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.
Due to the nature of cycles, upcycles' rising bottoms trendlines almost always begin relatively flat, so, SPX (RUT, NDX, and KOL etc) should put in a cycle low on Wednesday or Thursday only modestly above today 9-16's cycle low.
The three month sector NEM Lead Indicator (http://finance.yahoo.com/q/ta?s=%5EXAU&t=3m&l=on&z=m&q=l&p=&a=&c=%5Ehui,nem) is extremely bullish, which is another sign that GDX/HUI/XAU/GLD and reliable lead indicator NEM were probably very near an important cycle low.
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) broad market Walmart (WMT) Lead Indicator, used in concert with the sector NEM Lead Indicator, is extremely bullish, which is another sign that GDX/HUI/XAU/GLD and reliable lead indicator NEM were probably very near an important cycle low.
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.
Upside gaps were created at 9-2's open at 37.64 for GDX, at 45.10 for NEM (also watch 46.12), and, at 81.71 for GLD, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.
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 enter a Cyclical Bull Market. A few examples are 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.
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, and, GLD created one at 86.09. Upside gaps were created on 7-23 at 47 for GDX, 432.50 for HUI, 185.04 for the XAU, and, at 93.06 for GLD.
SPX appears to have put in a very important Wave A major intermediate term cycle low today, see http://stockcharts.com/charts/gallery.html?%24spx, that's Wave A down of the Cyclical Bear Market since 10-11-07. Note the very large very bullish inverse spike on today 9-16's candle.
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 9-16-08).
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 (createded 9-10). WMT has an upside gap at 63.17 (created 9-12) 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 are/were near an important cycle low.
VIX fell a very sharp -3.85% today 9-16 versus SPX rising a significant +1.75%, which is a sharp +2.10% rise in complacency (-3.85% + +1.75% = -2.10% decline in the SPX (S & P 500) wall of worry) that points to some severe weakness early on Wednesday 9-17.
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 9-16-08) 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
12:45 PM
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