SPX (S & P 500) Is Probably Doing An Inverse Elliott Wave 12345 Down Up Down Up Down Pattern Since Late On 12-17-08

SPX's (S & P 500) short term Wave A downcycle (since late 12-17-08) is probably doing an inverse Elliott Wave 12345 down up down up down pattern, see the intraday candlestick chart at http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=, and, see the daily candlestick chart at http://stockcharts.com/charts/gallery.html?%24spx. Wave 5 down should bottom probably early tomorrow. Wave 4 up peaked early today, and, Wave 2 up peaked early on Friday 12-19.

If SPX (S & P 500)/the market is about to experience a substantial decline and take out the November 2008 cycle low at 741.02, see http://stockcharts.com/charts/gallery.html?%24spx, which appears likely, then, this short term Wave A downcycle (since late 12-17-08) is probably part of a larger/longer Wave A downcycle.

Note that, since the November 2008 cycle low at 741.02, SPX (S & P 500) did an Elliott Wave 12345 up down up down up pattern in very anemic rollover mode, with the Wave 5 cycle high being a bearish double top, see http://stockcharts.com/charts/gallery.html?%24spx.

Reliable broad market lead indicator WMT’s (Walmart) short term likely countertrend Wave B type move appears to have peaked two days ago, see http://stockcharts.com/charts/gallery.html?wmt. WMT looks like it broke down out of it’s short term uptrending channel today.

The broad market WMT Lead Indicator is extremely bullish the past week, at -0.28% versus SPX (S & P 500) today/on 12-23, +2.28% on 12-22, +0.31% on 12-19, +2.52% on 12-18, +0.87% on 12-17, which correctly was a very short term bearish indication.

I did two SDS (ultra short S & P 500 (SPX) ETF) trades today (2 minutes 52 seconds and a 7 minuteish one), and, made a little over 21 cents per share = $210+ per 1000 shares traded.

Once the gold/silver stock sector correction ends (GDX/HUI/XAU Wave 2 minor intermediate term downcycle since 12-17-08), I'll be looking to trade GDX/EGO/AEM/SLW etc long overnight (will probably trade short term cycles, holding for a few days), and, I'll probably look to trade ultra short ETFs (SDS, TWM, QID, DUG, SRS, SMN etc) overnight (holding for a few days), when an S & P 500 (SPX) short term countertrend Wave B upcycle (should start tomorrow) peaks in about a week.

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

My favorite gold/silver stock sector (the metals lag and will probably bottom next year) is the only sector (GDX/HUI/XAU/NEM, http://stockcharts.com/charts/gallery.html?gdx) I know of that is very likely in a (Wave 3) Cyclical Bull Market since late October 2008, see chart one at http://www.joefrocks.com/GoldStockCharts.html, but, is in a Wave 2 minor intermediate term downcycle since 12-17-08.

GDX/HUI/XAU are in a monster short term Wave A downcycle, see http://stockcharts.com/charts/gallery.html?gdx, of the Wave 2 minor intermediate term downcycle since 12-17-08.

Watch GDX's (Gold Miners ETF) downside gaps at 28.67, 25.41, and 23.23, some or all of which will probably get filled in this Wave 2 minor intermediate term downcycle since 12-17-08.

Note that reliable gold sector lead indicator NEM has a bearish large spike on 12-17-08's bearish red (close below the open) candle, see http://stockcharts.com/charts/gallery.html?nem, and, NEM has a bearish medium spike on yesterday 12-22's candle, and, the NEM Lead Indicator was very bearish today, at -1.60% versus the XAU on 12-23-08, and, was bearish yesterday, at -0.95% versus the XAU on 12-22-08.

So, while GDX/HUI/XAU/the gold/silver stock sector (see chart one at http://www.joefrocks.com/GoldStockCharts.html) broke out the week before last and hit a 5% major buy signal, short term a Wave 2 minor intermediate term downcycle/correction has begun. See Friday's first post at http://tradethecycles.blogspot.com/2008/12/reliable-gold-sector-lead-indicator.html for more details.

Obviously, the Madoff scandal and it's reverberations, the US auto industry uncertainty and layoffs/major plant idling, and, the overall state of the economy/financial institutions, are major negatives for the market.

For you oil and gas sector aficionados, see the XOI (AMEX Oil and Gas) at http://stockcharts.com/charts/gallery.html?%24xoi, obviously, like the major averages, waiting for a 5% major buy signal is the prudent thing to do.

The XOM (Exxon Mobil) Lead Indicator is extremely bearish recently, at
+0.97% versus the XOI today/on 12-23, +1.65% on 12-22, -2.08% on 12-19, +0.09% on 12-18, -3.00% on 12-17, -1.09% on 12-16, -0.54% on 12-15, +1.67% on 12-12, -1.07% on 12-11, -1.61% on 12-10, -1.41% on 12-9, -2.20% on 12-8, -1.47% on 12-5.

SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx)/the market/most sectors/indexes might have bottomed (doubtful obviously, because, they didn't hit a 5% major buy signal yet, and, they appear to be breaking down), 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.

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/

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