A Gold/Precious Metals Sector Crash Is In Effect
A gold/precious metals sector crash is in effect, HUI (AMEX Gold Bugs Index) fell -16.08% today 10-2-08, see http://stockcharts.com/charts/gallery.html?%24hui. This means that 9-11-08 probably wasn't a Wave A major intermediate term cycle low for GDX/HUI/XAU.
Today 10-2's HUI/GDX/XAU candle doesn't have the usual large bullish inverse spike that tends to mark important cycle lows, see http://stockcharts.com/charts/gallery.html?%24hui, and, both the sector NEM Lead Indicator (+4.06% versus the XAU on 10-2) and the broad market Walmart (WMT) Lead Indicator (+2.67% versus the S & P 500 (SPX) on 10-2) were extremely bullish today, which is very short term bearish, indicating that more downside is likely tomorrow and possibly also on Monday/next week. That's the bad news.
The huge spiking action from 9-11-08 until 9-22-08 for HUI/GDX/XAU (9-11-08 until 9-29-08 for gold/GLD, note that gold lagged as usual) was a sign that that upcycle might be a countertrend Wave B upcycle, because, countertrend action tends to be much more vertical/spiking action than what occurs in normal upcycles.
The savvy non contrarian gold Commercial Traders nailed last week's and 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.
Here's some great news amidst the incredible gloom for gold bugs. If HUI falls to it's primary multi year (Since November 2000, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html) Secular Bull Market uptrend line at 220ish in the next few days/near future, then, the Wave 2 Cyclical Bear Market since 3-17-08 will probably conclude/end.
Please keep in mind that GDX/HUI/XAU have to hit a 5% follow through (after breaking the downtrend line since 3-17-08) major buy signal before the Trade the Cycles system indicates that GDX/HUI/XAU very likely put in a Wave 2 Cyclical Bear Market cycle low (if HUI falls to 220ish) and entered a multi year (probably 5 to 7 years) Wave 3 Cyclical Bull Market.
"My" downside target (where the primary multi year trendline is, basic stuff) for gold is $500 to $550 (see chart 3 at http://www.joefrocks.com/GoldStockCharts.html), which obviously means that gold probably has a long way to go on the downside (lagging GDX/HUI/XAU).
Reliable lead indicator Newmont Mining (NEM) took out it's cycle low at 35.79 from 9-11-08 today, see http://stockcharts.com/charts/gallery.html?nem, with a cycle low at 34.12, which is a strong indication that GDX/HUI/XAU will also take out their 9-11-08 cycle low.
This means that 35.79 obviously wasn't an NEM Cyclical Bear Market (since 1-31-06) cycle low, but, that cycle low might be imminent and might occur in the next session or two.
Tomorrow I'll be looking to trade DIG (Ultra Oil & Gas ProShares), see http://stockcharts.com/charts/gallery.html?dig, and, see http://finance.yahoo.com/q/ta?s=dig&t=5d&l=on&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. DIG looks like it might try to fill today's upside gap at 60.46 in the next session or two, however, more downside tomorrow appears likely, and, another gap down might occur at tomorrow's open, in which case I'll obviously look to trade DUG (UltraShort Oil & Gas ProShares) instead (especially if it's a bearish large breakaway type gap down, but, if it's a small gap that quickly gets filled I might trade long via DIG), or, I'll be looking to double short oil via DTO, the double short oil ETN (Exchange Traded Note).
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.
A Cyclical Bear Market 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).
9-30 was probably countertrend action by SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx)/major averages, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c, which means that they probably didn't bottom on 9-29-08.
A major clue is that SPX doesn't have the usual bullish large inverse spike on 9-29's candle, that tends to mark important cycle lows. Also, the broad market Walmart (WMT) Lead Indicator was an extremely bearish -2.81% versus SPX on 9-30 (-0.06% yesterday,
+2.67% today/on 10-2), which correctly pointed to severe weakness.
Today's extremely bullish +2.67% versus SPX indicates that SPX might bounce substantially tomorrow AT SOME POINT. Cycles (plus Elliott Wave patterns and gaps) are the primary market timing consideration. Indicators "kick in"/become important AFTER a cycle low or a cycle high occurs.
Reliable broad market lead indicator Walmart (WMT) has a very large very bullish inverse spike on a bullish white (close above the open) candle on 9-30, see http://stockcharts.com/charts/gallery.html?wmt. Walmart (WMT) appears to have put in a monthly cycle low on 9-30.
.......http://www.JoeFRocks.com/
NEM XAU HUI
Today 10-2's HUI/GDX/XAU candle doesn't have the usual large bullish inverse spike that tends to mark important cycle lows, see http://stockcharts.com/charts/gallery.html?%24hui, and, both the sector NEM Lead Indicator (+4.06% versus the XAU on 10-2) and the broad market Walmart (WMT) Lead Indicator (+2.67% versus the S & P 500 (SPX) on 10-2) were extremely bullish today, which is very short term bearish, indicating that more downside is likely tomorrow and possibly also on Monday/next week. That's the bad news.
The huge spiking action from 9-11-08 until 9-22-08 for HUI/GDX/XAU (9-11-08 until 9-29-08 for gold/GLD, note that gold lagged as usual) was a sign that that upcycle might be a countertrend Wave B upcycle, because, countertrend action tends to be much more vertical/spiking action than what occurs in normal upcycles.
The savvy non contrarian gold Commercial Traders nailed last week's and 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.
Here's some great news amidst the incredible gloom for gold bugs. If HUI falls to it's primary multi year (Since November 2000, see chart 8 at http://www.joefrocks.com/GoldStockCharts.html) Secular Bull Market uptrend line at 220ish in the next few days/near future, then, the Wave 2 Cyclical Bear Market since 3-17-08 will probably conclude/end.
Please keep in mind that GDX/HUI/XAU have to hit a 5% follow through (after breaking the downtrend line since 3-17-08) major buy signal before the Trade the Cycles system indicates that GDX/HUI/XAU very likely put in a Wave 2 Cyclical Bear Market cycle low (if HUI falls to 220ish) and entered a multi year (probably 5 to 7 years) Wave 3 Cyclical Bull Market.
"My" downside target (where the primary multi year trendline is, basic stuff) for gold is $500 to $550 (see chart 3 at http://www.joefrocks.com/GoldStockCharts.html), which obviously means that gold probably has a long way to go on the downside (lagging GDX/HUI/XAU).
Reliable lead indicator Newmont Mining (NEM) took out it's cycle low at 35.79 from 9-11-08 today, see http://stockcharts.com/charts/gallery.html?nem, with a cycle low at 34.12, which is a strong indication that GDX/HUI/XAU will also take out their 9-11-08 cycle low.
This means that 35.79 obviously wasn't an NEM Cyclical Bear Market (since 1-31-06) cycle low, but, that cycle low might be imminent and might occur in the next session or two.
Tomorrow I'll be looking to trade DIG (Ultra Oil & Gas ProShares), see http://stockcharts.com/charts/gallery.html?dig, and, see http://finance.yahoo.com/q/ta?s=dig&t=5d&l=on&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. DIG looks like it might try to fill today's upside gap at 60.46 in the next session or two, however, more downside tomorrow appears likely, and, another gap down might occur at tomorrow's open, in which case I'll obviously look to trade DUG (UltraShort Oil & Gas ProShares) instead (especially if it's a bearish large breakaway type gap down, but, if it's a small gap that quickly gets filled I might trade long via DIG), or, I'll be looking to double short oil via DTO, the double short oil ETN (Exchange Traded Note).
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.
A Cyclical Bear Market 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).
9-30 was probably countertrend action by SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx)/major averages, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c, which means that they probably didn't bottom on 9-29-08.
A major clue is that SPX doesn't have the usual bullish large inverse spike on 9-29's candle, that tends to mark important cycle lows. Also, the broad market Walmart (WMT) Lead Indicator was an extremely bearish -2.81% versus SPX on 9-30 (-0.06% yesterday,
+2.67% today/on 10-2), which correctly pointed to severe weakness.
Today's extremely bullish +2.67% versus SPX indicates that SPX might bounce substantially tomorrow AT SOME POINT. Cycles (plus Elliott Wave patterns and gaps) are the primary market timing consideration. Indicators "kick in"/become important AFTER a cycle low or a cycle high occurs.
Reliable broad market lead indicator Walmart (WMT) has a very large very bullish inverse spike on a bullish white (close above the open) candle on 9-30, see http://stockcharts.com/charts/gallery.html?wmt. Walmart (WMT) appears to have put in a monthly cycle low on 9-30.
.......http://www.JoeFRocks.com/
NEM XAU HUI
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
1:23 PM
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