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/
NEM XAU HUI
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/
NEM XAU HUI
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
10:55 AM
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