GDX/HUI/XAU/the Gold/Silver Stock Sector Should Rock Next Week

GDX/HUI/XAU/the gold/silver stock sector should rock next week, see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, because, GDX/HUI/XAU appear to have put in a Wave 2 cycle low very early today 12-12-08, of the short term Wave 3 upcycle since 12-5-08, see http://stockcharts.com/charts/gallery.html?%24hui. Note HUI's bullish large inverse spike at 12-5-08's short term Wave 2 cycle low at 191.63.

Also, the gold/silver stock sector should rock next week, because, GDX/HUI/XAU experienced a major breakout/hit a 5% follow through major buy signal on Wednesday 12-10-08, see http://tradethecycles.blogspot.com/2008/12/huixau-hit-5-follow-through-major-buy.html, and, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=.

GDX's (Gold Miners ETF, http://stockcharts.com/charts/gallery.html?gdx) downside gaps at 25.41 and 23.23, created on 12-10-08 and 12-8-08, are large likely bullish breakaway gaps. It appears that the good times are back for the gold/silver stock sector.

The gold sector NEM Lead Indicator was a bullish +0.75% versus the XAU today/on 12-12-08. The five day intraday gold sector NEM Lead Indicator is also/closed at bullish today 12-12-08, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.

The broad market Walmart (WMT) Lead Indicator, at a bearish bordering on very bearish -0.99% versus the S & P 500 (SPX) today/on 12-12-08, must be used in concert with the sector lead indicator.

However, the five day WMT Lead Indicator, at -0.99% on 12-12, +2.02% on 12-11, -2.19% on 12-10, -0.73% on 12-9, -4.96% on 12-8, is extremely bearish, which is (typically) a very short term bullish indication, because, the market held up relatively well, despite such a bearish WMT Lead Indicator.

I'll look to day trade GDX (Gold Miners ETF) long early on Monday. With the XOM (Exxon Mobil) Lead Indicator at a very bullish +1.67% versus the XOI (AMEX Oil and Gas, http://stockcharts.com/charts/gallery.html?%24xoi) today/on 12-12, I'll also look to day trade DIG (Ultra Long Oil and Gas ETF) on Monday, and, I might day trade RUT (Russell 2000, http://stockcharts.com/charts/gallery.html?%24rut) ultra long via UWM on Monday.

Nothing discussed on this Blog is a recommendation, or, should be construed as investment advice.

Today I day traded DUG (UltraShort Oil and Gas ETF) twice. The first was a little under 4 minutes, netting a little over 5 cents/share ($50+ per 1000 shares traded), and, the second was a 38 second trade, netting a little over 22 cents/share ($220+ per 1000 shares traded).

SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) appears to have put in a Wave 4 (since 12-8-08) cycle low of the short term Wave 3 upcycle (since 12-1-08) very early today 12-12-08, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=. Note the bullish medium inverse spike on today's bullish white (close above the open) candle.

The Russell 2000 (RUT, http://stockcharts.com/charts/gallery.html?%24rut) has upside gaps at 473.14 (filled 12-8-08), 491.23 (filled 12-9-08), 545.97, 619.40, 671.59, 679.58, 704.79, 705.74, and 753.74. There are probably more upside gaps, but, for now, that's all one needs to be concerned with.

SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx)/the market/most sectors/indexes might have bottomed!, and, entered a Cyclical Bull Market, however, the Cyclical Bull Market for the major averages is likely to be a brief six to nine monthish one.

HUI/XAU (http://stockcharts.com/charts/gallery.html?%24xau) hit a 5% follow through major buy signal on Wednesday 12-10-08, breaking the multi month Wave 2 Cyclical Bear Market downtrend line since mid March 2008 by more than 5%, see HUI at http://finance.yahoo.com/q/ta?s=%5EHUI&t=6m&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=, and, see the XAU (the major breakout is more obvious in the XAU's chart) at http://finance.yahoo.com/q/ta?s=%5Exau&t=6m&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, which means that they very likely entered a Wave 3 Cyclical Bull Market in late October 2008. Note that HUI has a very bullish triple bottom in late October 2008. Trade the Cycles is now obviously on a buy signal for HUI/XAU.

Keep in mind/major warning that, not all gold/silver stocks have the same cycles. They can be vastly different. CDE (Coeur D' Alene Mines) has/had a bear market from/since 2004 for example, see http://finance.yahoo.com/q/ta?s=cde&t=my&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. Harmony Gold (HMY) is another stock that's been in a bear market since 2002, see http://finance.yahoo.com/q/ta?s=hmy&t=my&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=.

Since this is a Wave 3 HUI/XAU (http://stockcharts.com/charts/gallery.html?%24xau) Cyclical Bull Market, it's likely to be a great one, since Wave 3 upcycles tend to be considerably larger than Wave 1 upcycles.

As a matter of fact, the current short term upcycle since Friday 12-5-08, in which the major breakout occurred, see http://finance.yahoo.com/q/ta?s=%5Exau&t=6m&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, is a short term Wave 3 upcycle.

The gold/silver stock apocalypse since May 2006 (reliable gold sector lead indicator NEM since 1-31-06 and GDX/HUI/XAU since mid March 2008) is probably finally over for many/most gold/silver stocks, see the XAU's daily candlestick chart at http://stockcharts.com/charts/gallery.html?%24xau, and, see reliable gold sector lead indicator NEM's daily candlestick chart at http://stockcharts.com/charts/gallery.html?nem. Reliable gold sector lead indicator NEM put in a bullish double bottom in late October/late November 2008 at 21.40/21.17.

It'll take time to inflate the world out of this deflationary mess/credit crisis. Yes, gold might hit $2000+ in about 10 years, but, it might hit $350-$400 next year, when it finally bottoms. Remember that HUI/XAU bottomed in late 2000, whereas, gold bottomed in April 2001 and silver didn't bottom until late 2001. The metals LAG.

My original Trade the Cycles system uses the reliable Elliott Wave patterns (see the Trade the Cycles charts at http://www.joefrocks.com/GoldStockCharts.html) and maps them to cycles of various timeframes (an Elliott Wave is either an upcycle or a downcycle), from very short term (hours/days), short term (days/weeks), monthly (4-7 weeks), minor intermediate term (2-3 months), major intermediate term (3-12 months), long term (1 to 2 years), Cyclical Bull/Bear Market (6 months to 7 years, yes, a bull/bear can be relatively brief), Secular Bull/Bear Market (8-20+ years).

Gaps are very important also, since most gaps get filled and they often provide insight into when cycle highs/lows will occur.

.......http://www.JoeFRocks.com/

NEM XAU HUI