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/
NEM XAU HUI
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/
NEM XAU HUI
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
12:52 PM
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