Today's GDX/HUI/XAU Mini Crash Was Probably Wave 4 Down Of A Short Term Wave 1 Upcycle
Today 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 have done an up down up down pattern since early on 9-11-08, and, appear to have entered Wave 5 of a Short Term Wave 1 Upcycle late in the session, because, they put in a cycle low shortly before session's end modestly above where the Wave 4 cycle low appears to have occurred.
This jives with the extremely bullish sector NEM Lead Indicator today, at +2.86% versus the XAU on 9-15, and, jives with the extremely bullish broad market Walmart (WMT) Lead Indicator today, at +3.40% versus the S & P 500 (SPX) on 9-15.
However, normally an extremely bullish lead indicator is very short term contrarian and points to early weakness tomorrow 9-16, so, especially since both lead indicators were extremely bullish today, and, this is a crazy news driven market, early GDX/HUI/XAU weakness, as well as major averages/most sectors (most/all sectors are represented in the S & P 500 (SPX), which is the lead program trading index, and, why sector manipulation is impossible) weakness, won't be surprising.
I'll be looking to trade AEM (should do Wave 5 of a short term Wave 1, see http://finance.yahoo.com/q/ta?s=aem&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, http://stockcharts.com/charts/gallery.html?aem) or NXG long early tomorrow (should do Wave 3 of a short term Wave 1, see http://finance.yahoo.com/q/ta?s=nxg&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, http://stockcharts.com/charts/gallery.html?nxg). Then, when GDX/HUI/XAU's Wave 5 of a Short Term Wave 1 Upcycle peaks, I'll look to short GDX and maybe also short gold via DZZ.
Since tomorrow is the Fed's FOMC (I like to be in cash when the Fed announcement occurs at 2:15 anyway) and this is obviously a crazy major news driven market, I'll probably be in cash at 2:15 tomorrow 9-16. So, I might only trade early in tomorrow's session. The Fed is likely to cut the Fed Funds and the Discount rate by about 50 basis points (half point) or more tomorrow.
KOL, the coal ETF, took out 9-11's cycle low that was a major cycle low candidate, which isn't too surprising, since 9-11's candle didn't have the usual large inverse spike that tends to mark important cycle lows, see http://stockcharts.com/charts/gallery.html?kol. I might day trade KOL short tomorrow.
The S & P 500 (SPX) took out the 7-15-08 cycle low that appeared to be a Wave A major intermediate term cycle low, see http://stockcharts.com/charts/gallery.html?%24spx, which isn't too surprising, since the monthly upcycle from 7-15-08 until 8-11-08 was anemic and failed to do the usual Elliott Wave 12345 up down up down up upcycle pattern.
SPX's extreme volatility today (-4.714% today 9-15-08), plus the Elliott Wave patterns since the 8-11-08 monthly cycle high (SPX is in Wave C of Wave C now, see http://stockcharts.com/charts/gallery.html?%24spx), suggest that the S & P 500 (SPX) might put in a Wave A major intermediate term cycle low tomorrow. Extreme volatility almost always occurs very near or at important cycle lows or cycle highs.
There's obviously a good chance that the Fed will announce a rate cut tomorrow 9-16, that will cause the major averages/market, that's obviously due to bottom/rally anyway, to spike/rally substantially.
For Friday's update see http://tradethecycles.blogspot.com/2008/09/gdxhuixau-and-nem-major-averages-and.html.
.......http://www.JoeFRocks.com/
NEM XAU HUI
GDX/HUI/XAU have done an up down up down pattern since early on 9-11-08, and, appear to have entered Wave 5 of a Short Term Wave 1 Upcycle late in the session, because, they put in a cycle low shortly before session's end modestly above where the Wave 4 cycle low appears to have occurred.
This jives with the extremely bullish sector NEM Lead Indicator today, at +2.86% versus the XAU on 9-15, and, jives with the extremely bullish broad market Walmart (WMT) Lead Indicator today, at +3.40% versus the S & P 500 (SPX) on 9-15.
However, normally an extremely bullish lead indicator is very short term contrarian and points to early weakness tomorrow 9-16, so, especially since both lead indicators were extremely bullish today, and, this is a crazy news driven market, early GDX/HUI/XAU weakness, as well as major averages/most sectors (most/all sectors are represented in the S & P 500 (SPX), which is the lead program trading index, and, why sector manipulation is impossible) weakness, won't be surprising.
I'll be looking to trade AEM (should do Wave 5 of a short term Wave 1, see http://finance.yahoo.com/q/ta?s=aem&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, http://stockcharts.com/charts/gallery.html?aem) or NXG long early tomorrow (should do Wave 3 of a short term Wave 1, see http://finance.yahoo.com/q/ta?s=nxg&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, http://stockcharts.com/charts/gallery.html?nxg). Then, when GDX/HUI/XAU's Wave 5 of a Short Term Wave 1 Upcycle peaks, I'll look to short GDX and maybe also short gold via DZZ.
Since tomorrow is the Fed's FOMC (I like to be in cash when the Fed announcement occurs at 2:15 anyway) and this is obviously a crazy major news driven market, I'll probably be in cash at 2:15 tomorrow 9-16. So, I might only trade early in tomorrow's session. The Fed is likely to cut the Fed Funds and the Discount rate by about 50 basis points (half point) or more tomorrow.
KOL, the coal ETF, took out 9-11's cycle low that was a major cycle low candidate, which isn't too surprising, since 9-11's candle didn't have the usual large inverse spike that tends to mark important cycle lows, see http://stockcharts.com/charts/gallery.html?kol. I might day trade KOL short tomorrow.
The S & P 500 (SPX) took out the 7-15-08 cycle low that appeared to be a Wave A major intermediate term cycle low, see http://stockcharts.com/charts/gallery.html?%24spx, which isn't too surprising, since the monthly upcycle from 7-15-08 until 8-11-08 was anemic and failed to do the usual Elliott Wave 12345 up down up down up upcycle pattern.
SPX's extreme volatility today (-4.714% today 9-15-08), plus the Elliott Wave patterns since the 8-11-08 monthly cycle high (SPX is in Wave C of Wave C now, see http://stockcharts.com/charts/gallery.html?%24spx), suggest that the S & P 500 (SPX) might put in a Wave A major intermediate term cycle low tomorrow. Extreme volatility almost always occurs very near or at important cycle lows or cycle highs.
There's obviously a good chance that the Fed will announce a rate cut tomorrow 9-16, that will cause the major averages/market, that's obviously due to bottom/rally anyway, to spike/rally substantially.
For Friday's update see http://tradethecycles.blogspot.com/2008/09/gdxhuixau-and-nem-major-averages-and.html.
.......http://www.JoeFRocks.com/
NEM XAU HUI
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
1:18 PM
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