Trade the Cycles

Wednesday, April 30, 2008

SPX's (S & P 500) Short Term Wave 1 Upcycle Probably Peaked Today In Dramatic Rollover Mode

SPX's (S & P 500) short term Wave 1 upcycle since 4-15-08 (monthly upcycle began, Wave B intermediate term upcycle began on 3-17-08 for SPX/NDX and on 3-10-08 for RUT) probably peaked today 4-30 (shortly after the rate decision) in dramatic rollover mode versus 4-18-08's cycle high, see the daily candlestick chart at http://stockcharts.com/charts/gallery.html?%24spx, and, see the 5 day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. Note the large bearish spikes on the daily and intraday candlestick charts.

SPX was doing a Wave A down type move (of the short term Wave 2 downcycle that began late today) late today, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, that looks like it'll bottom shortly after tomorrow's open.

In a countertrend Wave B type rebound tomorrow I'll look to short SPX, NDX, or, RUT via SDS, QID, or TWM. SPX's large spike on the intraday and daily candlestick charts (see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c and http://stockcharts.com/charts/gallery.html?%24spx) at today's likely short term Wave 1 cycle high makes SPX the best short sale candidate right now. SPX's short term Wave 2 downcycle will probably bottom shortly after the downside gap at 1365.56 gets filled.

NDX's (NASDAQ 100) short term Wave 1 upcycle since 4-15-08 probably peaked today 4-30 in dramatic rollover mode versus 4-24's cycle high, see http://stockcharts.com/charts/gallery.html?%24ndx. NDX (NASDAQ 100) will probably fill it's downside gap at 1881.65 in the short term Wave 2 downcycle (in the next day or two).

It looks like NDX will probably fill 4-23's downside gap at 1881.65 in a short term Wave 2 downcycle, and, might make a run at Friday 4-18's downside gap at 1840.88, which appears to be a bullish breakaway gap. If 1840.88 doesn't get filled then NDX appears to be the best long trade (I'll use QLD, the Ultra Long QQQQ ETF) for the short term Wave 3 upcycle that will probably begin this week.

I'll be looking to trade SPX or NDX ultra short early tomorrow 5-1 via SDS, QID, or TWM. Watch downside gaps at 1365.56 for SPX and at 1881.65 for NDX (692.06 for RUT). SPX and NDX should bottom shortly after those gaps (probably) get filled. RUT (Russell 2000) appears to be in a short term Wave 3 upcycle (downside gap at 692.06).

The WMT Lead Indicator was a bearish -0.69% versus SPX today 4-30, was an extremely bullish +2.59% versus SPX on 4-29, was a modestly bearish -0.41% on 4-28 and a modestly bearish -0.30% on 4-25 (+0.29% on 4-24, +0.36% on 4-23, +1.18% on 4-22, +0.28% on 4-21, -0.85% on 4-16, +1.57% on 4-15, +0.98% on 4-14, +2.30% on 4-11, +0.51% on 4-10, +0.24% on 4-9, +0.92% on 4-8).

VIX rose +2.72% today 4-30 versus SPX falling -0.39%, which is a sharp +2.33% rise in fear (+2.72% + -0.39% = +2.33% rise in the SPX (S & P 500) wall of worry) that points to some sharp strength on Thursday 5-1.

SPX (S & P 500) and NDX (NASDAQ 100) put in Wave A intermediate term cycle (since 10-11-07 for SPX and late October 2007 for NDX) lows on 3-17, while RUT (Russell 2000) did so on 3-10, see http://stockcharts.com/charts/gallery.html?%24spx for SPX.

The Upside Surprise/Rollover Barometer is at "Likely" due to the aggressive Fed credit extended since 2-28-08, that fuels index related program buying ("only" 70% of the dollar volume on the NYSE), see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.

A Cyclical Bear Market probably/very likely 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).

SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=. SPX (S & P 500) has a bullish breakaway gap at 1276.60 from 3-18's open and WMT has one at 49.95 from 3-18's open.

The XAU's (http://stockcharts.com/charts/gallery.html?%24xau) short term countertrend Wave B upcycle that began on 3-20 (HUI/gold since 4-1) did an Elliott Wave 12345 up down up down up pattern, and, peaked on 4-17 (bearish double top with 4-16), and, the Wave B trendline broke down Wednesday 4-23.

Wave A of the short term Wave C since 4-17 might not have bottomed yet, believe it or not, from looking at the daily candlestick HUI/XAU charts, see http://stockcharts.com/charts/gallery.html?%24hui and http://stockcharts.com/charts/gallery.html?%24xau.

HUI/XAU are in an Elliott Wave 12345 up down up down up Wave B type upcycle (note the spiking behavior during rallies) since late yesterday, see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, that looks like it'll peak early/mid session tomorrow, so, there might be a good GDX (Gold Miners ETF) shorting opportunity tomorrow.

I'll be looking to/might trade GDX (Gold Miners ETF) short tomorrow. If reliable lead indicator NEM trys to fill it's downside gap at 42.29, then tomorrow could be another big down day for HUI/XAU. Watch the XAU's downside gap at 161.75 if severe weakness occurs and watch GDX's downside gaps at 38.48, 37.65, 36.51, 35.71, 34.49, 32.20. NEM has downside gaps at 42.29, 41.52.

The NEM Lead Indicator was a slightly bullish +0.16% versus the XAU today/on 4-30, was a very bullish +2.06% versus the XAU on 4-29, was a modestly bearish -0.35% on 4-28, was a very bullish +2.02% on 4-25, was a very bullish +1.83% on 4-24, and, was a very bullish +1.67% on 4-23. The NEM Lead Indicator was a bearish -0.65% on 4-22 and was a very bearish -1.43% on 4-21.

Gold and silver had two Cyclical Bear Markets in the previous Secular Bull Market that peaked in 1980, corresponding to Elliott Wave 2 and 4 downcycles, see http://tradethecycles.blogspot.com/2008/03/gold-and-silvers-two-cyclical-bear.html.

See http://tradethecycles.blogspot.com/2008/04/crashing-velocity-circulation-of-money.html. My previous 18 month $500-550 cycle low target range for gold's Wave 2 Cyclical Bear Market is probably too optimistic. Probably 2-3 years and $450-500 is more realistic, given the extremely deflationary environment.

"The Bull Case For Gold And Why It Is Totally Incorrect," see http://tradethecycles.blogspot.com/2008/04/bull-case-for-gold-and-why-it-is.html.

Concerning HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal six weeks ago, see http://stockcharts.com/charts/gallery.html?%24xau. The multi month uptrend lines broke down and 5%+ follow through occurred to the downside. HUI/XAU/gold (gold might lag and peak in rollover mode) are in the midst of a major intermediate term downcycle, that's probably the start of an 18 monthish Wave 2 Cyclical Bear Market. HUI/XAU/gold will probably fall -50%+ in this bear market. Got cycles?

HUI/XAU very likely put in an intermediate term and 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.

For the five day NEM Lead Indicator see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.

The rest of the info is for reference purposes or for new readers.

Gold's primary Secular Bull Market (since April 2001) uptrend line is at $500ish, see chart two at http://www.joefrocks.com/GoldStockCharts.html.

The severe weakness/action recently tells us something, just as the severe weakness/5% sell signal that occurred in May 2006 was a good one, since HUI/XAU/gold (http://stockcharts.com/charts/gallery.html?%24xau) were underwater versus the May 2006 cycle high for about 17 months.

A rollover long term upcycle was in effect from June 2006 (from October 2006 for the XAU, http://stockcharts.com/charts/gallery.html?%24xau) until the recent cycle highs, that was probably the Wave 1 Cyclical Bull Market (began in late 2000 for HUI/XAU and in April 2001 for gold, which was a slightly higher bullish double bottom with the 1999 cycle low) peaking in dramatic rollover mode versus the May 2006 cycle high. One can only discuss likely scenarios, not certainties.

The real estate/too easy mortgage boom from 2002 until early 2006 was very inflationary. The current bust is obviously the diametric opposite/very deflationary. Combined with plummeting major world stock markets, many annihilated financial stocks, plummeting money market rates and bond yields, plummeting credit/debt instruments, tight credit and mortgage lending, real estate bust, etc and it's pretty obvious that the environment is very deflationary.

.......http://www.JoeFROCKS.com/ .

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The Gold Dips Are Saying That The "Correction" Is Almost Over

The gold dips are saying that the "correction" is almost over and are saying or implying that investors/traders should buy the dip, which is what they always say. Beware of weak minded undisciplined minds or scam artists. Gold is very likely in a 2-3 year Wave 2 Cyclical Bear Market, in which it'll fall to $450-500. The economic bust, triggered by the residential real estate bust/poor lending practices credit debacle, is very deflationary.

The inflationary real estate/easy mortgage money boom from 2002 until early 2006 is what kept the US and world's economy in reasonably good shape after the stock market/economic bubble burst in March 2000 and a recession occurred in 2001. The Fed's massive liquidity surge to prevent year 2000 software related economic problems/weakness fueled that bubble and made things much worse.

The huge problem for gold and silver now is, where does the next inflationary boom/economic upcycle come from? It won't be real estate/easy credit/money, which is obviously in a huge multi year bust/bear market. Also, stocks worldwide have been in a Cyclical Bear Market since the middle to end of last year.

The Fed is nearly powerless now to inflate the US economy as discussed below. I don't see what will get us out of the huge deflationary mess any time soon. Some gold writers keep harping about how rapid money supply growth will cause gold to reach $1500+ in the next few years. Forgetaboutit!

The crashing velocity (circulation) of money, see http://www.bullandbearwise.com/VelocityChart.asp, is more than offsetting rapid M3 money supply growth, which means that the Fed's efforts to inflate the US economy are like using a pea shooter against an Elephant.

Velocity of money is defined as GDP divided by M3, so, assuming M3 is growing at roughly +15%+/year, it's not enough to offset the crashing decline in the circulation/velocity of money, brought on by the real estate bust, unraveling of credit/debt instruments, stock market Bear Market, etc.

The crashing velocity (circulation) of money chart at http://www.bullandbearwise.com/VelocityChart.asp, which means that rapid (depending on which measure one looks at) money supply growth is having less and less of a stimulative/inflationary effect on the US economy, which has created a very deflationary environment. Basically, the Fed is nearly powerless now to stimulate the US economy, especially since rates are so low now. They obviously can't do much more rate cutting.

The unraveling of the (abused) credit/debt instruments (CDO's, securitizations, etc) is causing the velocity (circulation) of money to crash at probably/very likely an even greater rate in recent months, which is a very deflationary/bearish situation for gold/silver. The Fed's ability to inflate the US economy out of the current huge deflationary mess is very limited.

My previous 18 month $500-550 cycle low target range for gold's Wave 2 Cyclical Bear Market is probably too optimistic. Probably 2-3 years and $450-500 is more realistic, given the extremely deflationary environment.

I seem to be the only gold writer who gets the concept of a Cyclical Bear Market occurring in a Secular Bull Market, let alone anticipating one now. Gold and silver had two Cyclical Bear Markets in the previous Secular Bull Market that peaked in 1980, corresponding to Elliott Wave 2 and 4 downcycles, see http://tradethecycles.blogspot.com/2008/03/gold-and-silvers-two-cyclical-bear.html.

.......http://www.JoeFROCKS.com/ .


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Tuesday, April 29, 2008

SPX's (S & P 500) Short Term Wave 1 Upcycle Might Have Peaked Yesterday In Dramatic Rollover Mode

SPX's (S & P 500) short term Wave 1 upcycle since 4-15-08 (monthly upcycle began, Wave B intermediate term upcycle began on 3-17-08 for SPX/NDX and on 3-10-08 for RUT) might have peaked yesterday in dramatic rollover mode versus 4-18-08's cycle high, see the daily candlestick chart at http://stockcharts.com/charts/gallery.html?%24spx, and, see the 5 day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

SPX completed a Wave A down type move (of the short term Wave 2 downcycle that began yesterday) early today, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, then did a countertrend Wave B type move that appears to have peaked late in the session, followed by weakness near session's end, that appears to be the beginning of Wave C of the short term Wave 2 downcycle that began yesterday. SPX's short term Wave 2 will probably bottom shortly after the downside gap at 1365.56 gets filled.

NDX's (NASDAQ 100) short term Wave 1 upcycle since 4-15-08 peaked on 4-24, see http://stockcharts.com/charts/gallery.html?%24ndx, and, today's strength/cycle high was Wave B of a short term Wave 2 downcycle. NDX (NASDAQ 100) will probably fill it's downside gap at 1881.65 on Wednesday or Thursday.

It looks like NDX will probably fill 4-23's downside gap at 1881.65 in a short term Wave 2 downcycle, and, might make a run at Friday 4-18's downside gap at 1840.88, which appears to be a bullish breakaway gap. If 1840.88 doesn't get filled then NDX appears to be the best long trade (I'll use QLD, the Ultra Long QQQQ ETF) for the short term Wave 3 upcycle that will probably begin this week.

I'll be looking to trade SPX or NDX ultra short early tomorrow 4-30 via SDS or QID. Watch downside gaps at 1365.56 for SPX and at 1881.65 for NDX. SPX and NDX should bottom shortly after those gaps (probably) get filled. RUT (Russell 2000) appears to be in a short term Wave 3 upcycle (downside gap at 692.06).

The WMT Lead Indicator was an extremely bullish +2.59% versus SPX today 4-29, was a modestly bearish -0.41% versus SPX on 4-28 and a modestly bearish -0.30% versus SPX on 4-25 (+0.29% on 4-24, +0.36% on 4-23, +1.18% on 4-22, +0.28% on 4-21, -0.85% on 4-16, +1.57% on 4-15, +0.98% on 4-14, +2.30% on 4-11, +0.51% on 4-10, +0.24% on 4-9, +0.92% on 4-8).

VIX rose +3.06% today 4-29 versus SPX falling -0.39%, which is a sharp +2.67% rise in fear (+3.06% + -0.39% = +2.67% rise in the SPX (S & P 500) wall of worry) that points to some sharp strength on Wednesday 4-30.

SPX (S & P 500) and NDX (NASDAQ 100) put in Wave A intermediate term cycle (since 10-11-07 for SPX and late October 2007 for NDX) lows on 3-17, while RUT (Russell 2000) did so on 3-10, see http://stockcharts.com/charts/gallery.html?%24spx for SPX.

The Upside Surprise/Rollover Barometer is at "Likely" due to the aggressive Fed credit extended since 2-28-08, that fuels index related program buying ("only" 70% of the dollar volume on the NYSE), see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.

A Cyclical Bear Market probably/very likely 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).

SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=. SPX (S & P 500) has a bullish breakaway gap at 1276.60 from 3-18's open and WMT has one at 49.95 from 3-18's open.

The XAU's (http://stockcharts.com/charts/gallery.html?%24xau) short term countertrend Wave B upcycle that began on 3-20 (HUI/gold since 4-1) did an Elliott Wave 12345 up down up down up pattern, and, peaked on 4-17 (bearish double top with 4-16), and, the Wave B trendline broke down Wednesday 4-23.

Wave A of the short term Wave C since 4-17 probably didn't bottom yet, see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. The XAU had a large bearish spike on yesterday 4-28's bearish black candle (indicates a close below the open), see http://stockcharts.com/charts/gallery.html?%24xau, and, today's very bullish NEM Lead Indicator (+2.06% versus the XAU today 4-29) didn't rally HUI/XAU, see http://finance.yahoo.com/q/ta?s=^XAU&t=1d&l=on&z=m&q=l&p=&a=&c=^hui,nem, which points to more downside tomorrow, as does the fact that NEM didn't try to fill today's upside gap at 43.99, which appears to be a bearish breakaway gap (bearish big gap down on the intraday chart and bearish weak/anemic NEM action today, see http://finance.yahoo.com/q/ta?s=NEM&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=).

I'll be looking to/might trade GDX (Gold Miners ETF) short early tomorrow 4-30. If reliable lead indicator NEM trys to fill it's downside gap at 42.29, then tomorrow could be another big down day for HUI/XAU. Watch the XAU's downside gap at 161.75 if severe weakness occurs and watch GDX's downside gaps at 42.87 (filled today), 38.48, 37.65, 36.51, 35.71, 34.49, 32.20. NEM has downside gaps at 43 (filled today), 42.29, 41.52.

The NEM Lead Indicator was a very bullish +2.06% versus the XAU today 4-29, was a modestly bearish -0.35% versus the XAU on 4-28, was a very bullish +2.02% on 4-25, was a very bullish +1.83% on 4-24, and, was a very bullish +1.67% on 4-23. The NEM Lead Indicator was a bearish -0.65% on 4-22 and was a very bearish -1.43% on 4-21.

Gold and silver had two Cyclical Bear Markets in the previous Secular Bull Market that peaked in 1980, corresponding to Elliott Wave 2 and 4 downcycles, see http://tradethecycles.blogspot.com/2008/03/gold-and-silvers-two-cyclical-bear.html.

See http://tradethecycles.blogspot.com/2008/04/crashing-velocity-circulation-of-money.html. My 18 month $500-550 cycle low target range for gold's Wave 2 Cyclical Bear Market is probably too optimistic. Probably 2-3 years and $450-500 is more realistic, given the extremely deflationary environment.

"The Bull Case For Gold And Why It Is Totally Incorrect," see http://tradethecycles.blogspot.com/2008/04/bull-case-for-gold-and-why-it-is.html.

Concerning HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal six weeks ago, see http://stockcharts.com/charts/gallery.html?%24xau. The multi month uptrend lines broke down and 5%+ follow through occurred to the downside. HUI/XAU/gold (gold might lag and peak in rollover mode) are in the midst of a major intermediate term downcycle, that's probably the start of an 18 monthish Wave 2 Cyclical Bear Market. HUI/XAU/gold will probably fall -50%+ in this bear market. Got cycles?

HUI/XAU very likely put in an intermediate term and 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.

For the five day NEM Lead Indicator see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.

The rest of the info is for reference purposes or for new readers.

Gold's primary Secular Bull Market (since April 2001) uptrend line is at $500ish, see chart two at http://www.joefrocks.com/GoldStockCharts.html.

The severe weakness/action recently tells us something, just as the severe weakness/5% sell signal that occurred in May 2006 was a good one, since HUI/XAU/gold (http://stockcharts.com/charts/gallery.html?%24xau) were underwater versus the May 2006 cycle high for about 17 months.

A rollover long term upcycle was in effect from June 2006 (from October 2006 for the XAU, http://stockcharts.com/charts/gallery.html?%24xau) until the recent cycle highs, that was probably the Wave 1 Cyclical Bull Market (began in late 2000 for HUI/XAU and in April 2001 for gold, which was a slightly higher bullish double bottom with the 1999 cycle low) peaking in dramatic rollover mode versus the May 2006 cycle high. One can only discuss likely scenarios, not certainties.

The real estate/too easy mortgage boom from 2002 until early 2006 was very inflationary. The current bust is obviously the diametric opposite/very deflationary. Combined with plummeting major world stock markets, many annihilated financial stocks, plummeting money market rates and bond yields, plummeting credit/debt instruments, tight credit and mortgage lending, real estate bust, etc and it's pretty obvious that the environment is very deflationary.

.......http://www.JoeFROCKS.com/ .

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Monday, April 28, 2008

The US Dollar Might Have Entered A Cyclical Bull Market On 3-17-08

The US Dollar might have entered a Cyclical Bull Market on 3-17-08, see http://stockcharts.com/charts/gallery.html?%24usd, which is the same day that gold might have/probably entered a Cyclical Bear Market, see http://stockcharts.com/charts/gallery.html?%24gold. Note the US Dollar's very bullish very large inverse spike at 70.70 on 3-17-08 and note gold's very bearish very large spike at $1033.90 on 3-17-08.

The crashing velocity (circulation) of money, see http://tradethecycles.blogspot.com/2008/04/crashing-velocity-circulation-of-money.html, has created a very deflationary environment, because, it cancels out (very likely more than cancels out) rapid money supply growth.

My previous 18 month $500-550 cycle low target range for gold's Wave 2 Cyclical Bear Market is probably too optimistic. Probably 2-3 years and $450-500 is more realistic, given the extremely deflationary environment.

.......http://www.JoeFROCKS.com/ .



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SPX's (S & P 500) Short Term Wave 1 Upcycle Might Have Peaked Today In Dramatic Rollover Mode

SPX's (S & P 500) short term Wave 1 upcycle since 4-15-08 (monthly upcycle began, Wave B intermediate term upcycle began on 3-17-08 for SPX/NDX and on 3-10-08 for RUT) might have peaked today in dramatic rollover mode versus 4-18-08's cycle high, see the daily candlestick chart at http://stockcharts.com/charts/gallery.html?%24spx, and, see the 5 day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. A brief large final/Wave 5 type spike move might occur at tomorrow 4-29's open.

NDX's (NASDAQ 100) short term Wave 1 upcycle since 4-15-08 peaked on 4-24, see http://stockcharts.com/charts/gallery.html?%24ndx, and, today's strength/cycle high was Wave B of a short term Wave 2 downcycle. NDX (NASDAQ 100) will probably fill it's downside gap at 1881.65 on Tuesday or Wednesday.

It looks like NDX will probably fill 4-23's downside gap at 1881.65 in a short term Wave 2 downcycle, and, might make a run at Friday 4-18's downside gap at 1840.88, which appears to be a bullish breakaway gap. If 1840.88 doesn't get filled then NDX appears to be the best long trade (I'll use QLD, the Ultra Long QQQQ ETF) for the short term Wave 3 upcycle that will probably begin this week.

I'll be looking to trade SPX or NDX ultra short early tomorrow 4-29 via SDS or QID. Watch downside gaps at 1365.56 for SPX and at 1881.65 for NDX. SPX and NDX should bottom shortly after those gaps (probably) get filled. RUT (Russell 2000) appears to be in a short term Wave 3 upcycle (downside gap at 692.06).

The WMT Lead Indicator turned bearish on Friday 4-25, at a modestly bearish -0.41% versus SPX today/on 4-28 and a modestly bearish -0.30% versus SPX on 4-25 (+0.29% on 4-24, +0.36% on 4-23, +1.18% on 4-22, +0.28% on 4-21, -0.85% on 4-16, +1.57% on 4-15, +0.98% on 4-14, +2.30% on 4-11, +0.51% on 4-10, +0.24% on 4-9, +0.92% on 4-8).

VIX rose +0.26% today 4-28 versus SPX falling -0.11%, which is a slight +0.15% rise in fear (+0.26% + -0.11% = +0.15% rise in the SPX (S & P 500) wall of worry) that points to some slight strength on Tuesday 4-29.

SPX (S & P 500) and NDX (NASDAQ 100) put in Wave A intermediate term cycle (since 10-11-07 for SPX and late October 2007 for NDX) lows on 3-17, while RUT (Russell 2000) did so on 3-10, see http://stockcharts.com/charts/gallery.html?%24spx for SPX.

The Upside Surprise/Rollover Barometer is at "Likely" due to the aggressive Fed credit extended since 2-28-08, that fuels index related program buying ("only" 70% of the dollar volume on the NYSE), see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.

A Cyclical Bear Market probably/very likely 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).

SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=. SPX (S & P 500) has a bullish breakaway gap at 1276.60 from 3-18's open and WMT has one at 49.95 from 3-18's open.

The XAU's (http://stockcharts.com/charts/gallery.html?%24xau) short term countertrend Wave B upcycle that began on 3-20 (HUI/gold since 4-1) did an Elliott Wave 12345 up down up down up pattern, and, peaked on 4-17 (bearish double top with 4-16), and, the Wave B trendline broke down Wednesday 4-23.

Wave A of the short term Wave C since 4-17 probably didn't bottom yet, see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. The XAU has a large bearish spike on today 4-28's bearish black candle (indicates a close below the open), see http://stockcharts.com/charts/gallery.html?%24xau, and, the NEM Lead Indicator was a modestly bearish -0.35% versus the XAU today 4-28. Note how the intraday NEM Lead Indicator correctly portended weakness today, see http://finance.yahoo.com/q/ta?s=^XAU&t=1d&l=on&z=m&q=l&p=&a=&c=^hui,nem.

I'll be looking to/might trade GDX (Gold Miners ETF) short early tomorrow 4-29. If reliable lead indicator NEM trys to fill it's downside gap at 43 from/created Friday 4-25, then tomorrow could be a big down day for HUI/XAU. Watch the XAU's downside gap at 161.75 if severe weakness occurs and watch GDX's downside gaps at 42.87, 38.48, 37.65, 36.51, 35.71, 34.49, 32.20. NEM has downside gaps at 43, 42.29, 41.52.

The NEM Lead Indicator was a very bullish +2.02% versus the XAU on 4-25, was a very bullish +1.83% versus the XAU on 4-24, and, was a very bullish +1.67% versus the XAU on 4-23. The NEM Lead Indicator was a bearish -0.65% versus the XAU on 4-22 and was a very bearish -1.43% on 4-21.

Gold and silver had two Cyclical Bear Markets in the previous Secular Bull Market that peaked in 1980, corresponding to Elliott Wave 2 and 4 downcycles, see http://tradethecycles.blogspot.com/2008/03/gold-and-silvers-two-cyclical-bear.html.

See http://tradethecycles.blogspot.com/2008/04/crashing-velocity-circulation-of-money.html. My 18 month $500-550 cycle low target range for gold's Wave 2 Cyclical Bear Market is probably too optimistic. Probably 2-3 years and $450-500 is more realistic, given the extremely deflationary environment.

"The Bull Case For Gold And Why It Is Totally Incorrect," see http://tradethecycles.blogspot.com/2008/04/bull-case-for-gold-and-why-it-is.html.

Concerning HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal six weeks ago, see http://stockcharts.com/charts/gallery.html?%24xau. The multi month uptrend lines broke down and 5%+ follow through occurred to the downside. HUI/XAU/gold (gold might lag and peak in rollover mode) are in the midst of a major intermediate term downcycle, that's probably the start of an 18 monthish Wave 2 Cyclical Bear Market. HUI/XAU/gold will probably fall -50%+ in this bear market. Got cycles?

HUI/XAU very likely put in an intermediate term and 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.

For the five day NEM Lead Indicator see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.

The rest of the info is for reference purposes or for new readers.

Gold's primary Secular Bull Market (since April 2001) uptrend line is at $500ish, see chart two at http://www.joefrocks.com/GoldStockCharts.html.

The severe weakness/action recently tells us something, just as the severe weakness/5% sell signal that occurred in May 2006 was a good one, since HUI/XAU/gold (http://stockcharts.com/charts/gallery.html?%24xau) were underwater versus the May 2006 cycle high for about 17 months.

A rollover long term upcycle was in effect from June 2006 (from October 2006 for the XAU, http://stockcharts.com/charts/gallery.html?%24xau) until the recent cycle highs, that was probably the Wave 1 Cyclical Bull Market (began in late 2000 for HUI/XAU and in April 2001 for gold, which was a slightly higher bullish double bottom with the 1999 cycle low) peaking in dramatic rollover mode versus the May 2006 cycle high. One can only discuss likely scenarios, not certainties.

The real estate/too easy mortgage boom from 2002 until early 2006 was very inflationary. The current bust is obviously the diametric opposite/very deflationary. Combined with plummeting major world stock markets, many annihilated financial stocks, plummeting money market rates and bond yields, plummeting credit/debt instruments, tight credit and mortgage lending, real estate bust, etc and it's pretty obvious that the environment is very deflationary.

.......http://www.JoeFROCKS.com/ .

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Sunday, April 27, 2008

.......A Crashing Velocity (Circulation) Of Money

See the velocity (circulation) of money chart at http://www.bullandbearwise.com/VelocityChart.asp to see how it's crashing in recent years, which means that rapid (depending on which measure one looks at) money supply growth is having less and less of a stimulative/inflationary effect on the US economy, which has created a very deflationary environment. Basically, the Fed is nearly powerless now to stimulate the US economy, especially since rates are so low now. They obviously can't do much more rate cutting.

The unraveling of the (abused) credit/debt instruments (CDO's, securitizations, etc) is causing the velocity (circulation) of money to crash at probably/very likely an even greater rate in recent months, which is a very deflationary/bearish situation for gold/silver. The Fed's ability to inflate the US economy out of the current huge deflationary mess is very limited.

My 18 month $500-550 cycle low target range for gold's Wave 2 Cyclical Bear Market is probably too optimistic. Probably 2-3 years and $450-500 is more realistic, given the extremely deflationary environment.

.......http://www.JoeFROCKS.com/ .


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Saturday, April 26, 2008

My Synopsis Of The US Money Supply Situation - Very Negative For Gold/Silver

Here's my synopsis of the US money supply situation. The Fed's control of the money supply (adjusted monetary base, see a few paragraphs below) is becoming basically negligible (growing less than 2% year over year), especially since the velocity (circulation) of money is in a drastic downturn (tried to find a link showing it, might post it later if I find it), due to the unraveling of the credit/debt instruments.

The drastic decline in the velocity of money means that the money supply would have to grow very fast just to MAINTAIN THE ECONOMY, let alone grow it at a considerably faster pace and get us out of the current huge mess. A severe recession, which is obviously very deflationary and very negative for gold/silver, is a definite possibility.

From John Mauldin:

"Financial innovations introduced in the early 90's like securitizations, CDOs, etc. It is financial innovation that spurs above trend growth in velocity.

The money supply is growing very slowly, alarmingly fast or just about right, depending upon which monetary measure you use.

First, let's look at the adjusted monetary base, or plain old cash plus bank reserves held at the Federal Reserve. That is the only part of the money supply the Fed has any real direct control of. And it is not growing that much (less than 2%!), and a lot of the cash goes overseas, never to come back to the US. Also note that the growth in the monetary base has been trending down until recently, see http://research.stlouisfed.org/fred2/fredgraph?chart_type=line&s[1][id]=AMBSL&s[1][transformation]=pc1."

"A Slowdown in Velocity

Now, why is the velocity of money slowing down? Notice the real rise in V from 1990 through about 1997. Growth in M2 (see the above chart) was falling during most of that period, yet the economy was growing. That means that velocity had to rise faster than normal. Why? Primarily because of the financial innovations introduced in the early 90's like securitizations, CDOs, etc. It is financial innovation that spurs above trend growth in velocity.

And now we are watching the Great Unwind of financial innovations, as they went to excess and caused a credit crisis. In principle, a CDO or subprime asset backed security should be a good thing. And in the beginning they were. But then standards got loose, greed kicked in and Wall Street began to game the system. End of game.

What drove velocity to new highs is no longer part of the equation. Its absence is slowing things down. If the money supply did not rise significantly to offset that slowdown in velocity the economy would already be in a much deeper recession.

While the Fed does not have control over M2, when they lower interest rates, it is supposed to make us want to take on more risk, borrow money and boost the economy. So, they have an indirect influence.

I expect the Fed to cut another 25 basis points next week, and to give us a statement that will look neutral, with a nod toward difficult economic conditions. The latest Beige Book from the Fed was simply dreadful, so you can bet the governors will have a deteriorating economy in mind. Given the 25 plus year low in consumer confidence, they have little choice.

But the difference another 50 basis point cut (over the next few meetings) would make is not all that much. A 2% rate is already low. That would make the real rate (after inflation) negative. In one sense, 2% today is lower in real (inflation adjusted) terms than the 1% that Greenspan took it to. Back then inflation was just above 1%. We will have a negative real interest rate after this next cut. Depending upon which inflation measure you use (and there are a few with some wide differences), it could be as much as 2% negative. Now that is REAL stimulus.

And since we are on asides, let me predict that the official GDP for the first quarter will not be negative. You watch and see if the PCE deflator is below 3%. Call me cynical, but it would not surprise me, even as CPI is over 4%. Also, watch GDP get revised to negative next year. "

.......http://www.JoeFROCKS.com/ .

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Friday, April 25, 2008

SPX's (S & P 500) Big Short Term Wave 1 Upcycle Since 4-15-08 Is Peaking In Dramatic Rollover Mode

SPX's (S & P 500) big short term Wave 1 upcycle since 4-15-08 is peaking in dramatic rollover mode versus 4-18-08's cycle high, see the daily candlestick chart at http://stockcharts.com/charts/gallery.html?%24spx.

Massive Fed credit recently, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, has led to rollover action, because it fuels index related program buying.

From the 5 day intraday chart it looks like SPX's rollover upcycle since Tuesday 4-22 will peak (do Wave 5 of Wave 5 of the rollover upcycle since 4-22) early on Monday, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c, which means that the short term Wave 1 upcycle since 4-15-08 will probably peak early on Monday.

It looks like there will be a good SPX shorting opportunity early on Monday (NDX (NASDAQ 100) and RUT look good also, but, RUT (Russell 2000) appears to be in a short term Wave 3 upcycle since 4-22). Waiting for an intraday Wave A down type move and looking to go short in a countertrend intraday Wave B move makes sense, or, if there's a large spike on SPX's intraday and/or daily candlestick charts after it peaks, one might be a daredevil and day trade the Wave A move.

The WMT Lead Indicator turned bearish today, at a modestly bearish -0.30% versus SPX today/on 4-25 (+0.29% on 4-24, +0.36% on 4-23, +1.18% on 4-22, +0.28% on 4-21, -0.85% on 4-16, +1.57% on 4-15, +0.98% on 4-14, +2.30% on 4-11, +0.51% on 4-10, +0.24% on 4-9, +0.92% on 4-8).

VIX fell -2.34% today 4-25 versus SPX rising +0.65%, which is a significant +1.69% rise in complacency (-2.34% + + 0.65% = -1.69% decline in the SPX (S & P 500) wall of worry) that points to some significant weakness on Monday 4-28.

NDX (NASDAQ 100) also has an Elliott Wave 12345 up down up down up pattern on the daily chart since the monthly cycle low on 4-15, see http://stockcharts.com/charts/gallery.html?%24spx, which suggests that the short term Wave 1 upcycle either has or soon will peak (appears to/might have peaked yesterday).

It looks like NDX will probably fill 4-23's downside gap at 1881.65 in a short term Wave 2 downcycle, and, might make a run at Friday 4-18's downside gap at 1840.88, which appears to be a bullish breakaway gap. If 1840.88 doesn't get filled then NDX appears to be the best long trade (I'll use QLD, the Ultra Long QQQQ ETF) for the short term Wave 3 upcycle that will probably begin next week.

So, it looks like SPX will try to fill it's downside gap at 1365.56 in the short term Wave 2 downcycle. RUT (Russell 2000) appears to be in a short term Wave 3 upcycle (downside gap at 692.06).

There might be a good opportunity to day trade SPX/NDX/RUT short early on Monday. I will look to trade SDS, QID, or TWM. I day traded SDS today, with an entry point at 58.1499 and an exit point at 58.25.

SPX (S & P 500) and NDX (NASDAQ 100) put in Wave A intermediate term cycle (since 10-11-07 for SPX and late October 2007 for NDX) lows on 3-17, while RUT (Russell 2000) did so on 3-10, see http://stockcharts.com/charts/gallery.html?%24spx for SPX.

The Upside Surprise/Rollover Barometer is at "Likely" due to the aggressive Fed credit extended since 2-28-08, that fuels index related program buying ("only" 70% of the dollar volume on the NYSE), see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.

A Cyclical Bear Market probably 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).

SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=. SPX (S & P 500) has a bullish breakaway gap at 1276.60 from 3-18's open and WMT has one at 49.95 from 3-18's open.

The XAU's (http://stockcharts.com/charts/gallery.html?%24xau) short term countertrend Wave B upcycle that began on 3-20 (HUI/gold since 4-1) did an Elliott Wave 12345 up down up down up pattern, and, peaked on 4-17 (bearish double top with 4-16), and, the Wave B trendline broke down Wednesday 4-23.

Wave A of the short term Wave C since 4-17 might have bottomed today 4-25, see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. The NEM Lead Indicator was a very bullish +2.02% versus the XAU today 4-25, was a very bullish +1.83% versus the XAU on 4-24, and, was a very bullish +1.67% versus the XAU on 4-23. The NEM Lead Indicator was a bearish -0.65% versus the XAU on 4-22 and was a very bearish -1.43% on 4-21.

The XAU's downside gap at 172.87 got filled yesterday and Wave A of the short term Wave C since 4-17 appears to have bottomed early today, see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c. Important cycle highs/lows tend to occur shortly after gap filling action is completed, both in terms of time and price. NEM has downside gaps at 42.29, 41.52.

Gold and silver had two Cyclical Bear Markets in the previous Secular Bull Market that peaked in 1980, corresponding to Elliott Wave 2 and 4 downcycles, see http://tradethecycles.blogspot.com/2008/03/gold-and-silvers-two-cyclical-bear.html.

"The Bull Case For Gold And Why It Is Totally Incorrect," see http://tradethecycles.blogspot.com/2008/04/bull-case-for-gold-and-why-it-is.html.

Concerning HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal, see http://stockcharts.com/charts/gallery.html?%24xau. The multi month uptrend lines broke down and 5%+ follow through occurred to the downside. HUI/XAU/gold (gold might lag and peak in rollover mode) are in the midst of a major intermediate term downcycle, that's probably the start of an 18 monthish Wave 2 Cyclical Bear Market. HUI/XAU/gold will probably fall -50%+ in this bear market. Got cycles?

HUI/XAU very likely put in an intermediate term and 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.

For the five day NEM Lead Indicator see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.

The rest of the info is for reference purposes or for new readers.

Gold's primary Secular Bull Market (since April 2001) uptrend line is at $500ish, see chart two at http://www.joefrocks.com/GoldStockCharts.html.

The severe weakness/action recently tells us something, just as the severe weakness/5% sell signal that occurred in May 2006 was a good one, since HUI/XAU/gold (http://stockcharts.com/charts/gallery.html?%24xau) were underwater versus the May 2006 cycle high for about 17 months.

A rollover long term upcycle was in effect from June 2006 (from October 2006 for the XAU, http://stockcharts.com/charts/gallery.html?%24xau) until the recent cycle highs, that was probably the Wave 1 Cyclical Bull Market (began in late 2000 for HUI/XAU and in April 2001 for gold, which was a slightly higher bullish double bottom with the 1999 cycle low) peaking in dramatic rollover mode versus the May 2006 cycle high. One can only discuss likely scenarios, not certainties.

The real estate/too easy mortgage boom from 2002 until early 2006 was very inflationary. The current bust is obviously the diametric opposite/very deflationary. Combined with plummeting major world stock markets, many annihilated financial stocks, plummeting money market rates and bond yields, plummeting credit/debt instruments, tight credit and mortgage lending, real estate bust, etc and it's pretty obvious that the environment is very deflationary.

.......http://www.JoeFROCKS.com/ .

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Thursday, April 24, 2008

The Bull Case For Gold And Why It Is Totally Incorrect

The "inflation is everywhere" crowd is all wet. The inflation they speak of is a commodities bubble peaking and the world's central banks desperately trying to stave off a severe recession (fighting massive deflationary markets/factors) with rapid money supply growth.

The truth is that drastic deflation of assets (stocks worldwide, real estate, credit/debt instruments) and major deflationary factors (tight mortgage and retail credit lending, plummeting money market rates and bond yields) are everywhere.

Easy mortgage money and retail credit (autos, electronics, gas cards, credit cards, store cards, etc), combined with rock bottom interest rates, fueled a real estate boom from 2002 until early 2006, and, fueled a stock market/S & P 500 Cyclical Bull Market from October 2002 until October 11, 2007. The real estate boom and stock market Bull were obviously very inflationary. The current real estate bust/stock market Bear Market is very deflationary.

The easy credit years were very inflationary. What's occurring now is the diametric opposite situation, very tight money and drastically deflating assets (stocks worldwide, real estate, credit/debt instruments). It's an obviously very deflationary environment.

High commodities prices are obviously very deflationary to consumers/economies. Gas and grocery prices are pinching consumers, and, high energy costs are pinching businesses.

Cyclical Bear Markets occurring in a Secular Bull Market are corrections from a generational point of view. Gold and silver had two Cyclical Bear Markets in the previous Secular Bull Market that peaked in 1980, corresponding to Elliott Wave 2 and 4 downcycles/corrections, see http://tradethecycles.blogspot.com/2008/03/gold-and-silvers-two-cyclical-bear.html.

Have a goofy Mickey Mouse gold loon and/or scam artist explain why this time will be different and gold will defy gravity, especially in the face of massive deflation in stocks, credit/debt instruments, money market rates, real estate, tight mortgage/credit lending, etc

This is why the "bad news gold Bulls" are all wet right now, though I agree that a Secular generational Bull Market began in April 2001 for gold.

Gold probably entered a Wave 2 Cyclical Bear Market after the 3-17 cycle high at $1033.90, see http://stockcharts.com/charts/gallery.html?%24gold. Note the very large bearish spike on 3-17-08's candle.

A slightly lower or higher bearish double top cycle high might occur in a few weeks/months, but, gold has likely entered an 18 monthish Wave 2 Cyclical Bear Market, in which it should fall to $500-550, which is about where it's primary multi year Secular Bull Market uptrend line since April 2001 is.

To my knowledge I am the only one who is anticipating a protracted gold Bear Market now, which jives with the very deflationary worldwide economic/financial markets.

.......http://www.JoeFROCKS.com/ .

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SPX (S & P 500) Short Term Wave 1 Appears To Be Peaking In Dramatic Rollover Mode

SPX's (S & P 500) short term Wave 1 since 4-15 appears to be peaking in dramatic rollover mode, see the daily candlestick chart at http://stockcharts.com/charts/gallery.html?%24spx. Today 4-24's cycle high might be a slightly higher bearish short term double top with last Friday 4-18's cycle high.

The vertical spiking action yesterday and today is typical peaking (or countertrend Wave B) type action, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=.

SPX has an Elliott Wave 12345 up down up down up pattern on the daily chart since the monthly cycle low on 4-15, see http://stockcharts.com/charts/gallery.html?%24spx, which suggests that the short term Wave 1 upcycle since 4-15 has or soon will peak. Also, there's a bearish spike on today 4-24's candle, Williams %R is overbought, and, stochastics are very near an overbought condition (were overbought intraday, before the late session decline.

NDX (NASDAQ 100) also has an Elliott Wave 12345 up down up down up pattern on the daily chart since the monthly cycle low on 4-15, see http://stockcharts.com/charts/gallery.html?%24spx, which suggests that the short term Wave 1 upcycle either has or soon will peak (appears to have peaked today).

VIX, the SPX Volatility Index, fell -0.99% today 4-24 versus SPX rising +0.64%, which is a modest +0.35% rise in complacency that points to some modest weakness tomorrow, since the SPX wall of worry fell -0.35% = -0.99% + +0.64%.

It looks like NDX will probably fill 4-23's downside gap at 1881.65 in a short term Wave 2 downcycle, and, might make a run at Friday 4-18's downside gap at 1840.88, which appears to be a bullish breakaway gap. If 1840.88 doesn't get filled then NDX appears to be the best long trade (I'll use QLD, the Ultra Long QQQQ ETF) for the short term Wave 3 upcycle that will probably begin early next week.

So, it looks like SPX will try to fill it's downside gap at 1365.56 in the short term Wave 2 downcycle. RUT (Russell 2000) will probably try to fill it's downside gap at 692.06 in the short term Wave 2 downcycle.

There might be a good opportunity to day trade SPX/NDX/RUT short tomorrow. I will look to trade SDS, QID, or TWM early tomorrow.

SPX (S & P 500) and NDX (NASDAQ 100) put in Wave A intermediate term cycle (since 10-11-07 for SPX and late October 2007 for NDX) lows on 3-17, while RUT (Russell 2000) did so on 3-10, see http://stockcharts.com/charts/gallery.html?%24spx for SPX.

The Upside Surprise/Rollover Barometer is at "Likely" due to the aggressive Fed credit extended since 2-28-08, that fuels index related program buying ("only" 70% of the dollar volume on the NYSE), see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.

A Cyclical Bear Market probably 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).

SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=. SPX (S & P 500) has a bullish breakaway gap at 1276.60 from 3-18's open and WMT has one at 49.95 from 3-18's open.

The XAU's (http://stockcharts.com/charts/gallery.html?%24xau) short term countertrend Wave B upcycle that began on 3-20 (HUI/gold since 4-1) did an Elliott Wave 12345 up down up down up pattern, and, peaked on 4-17 (bearish double top with 4-16), and, the Wave B trendline broke down yesterday.

Wave A of the short term Wave C since 4-17 might have bottomed today or might do so early tomorrow 4-25, see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. The NEM Lead Indicator was a very bullish +1.83% versus the XAU today 4-24 and was a very bullish +1.67% versus the XAU on 4-23. The NEM Lead Indicator was a bearish -0.65% versus the XAU on 4-22 and was a very bearish -1.43% on 4-21.

The XAU's downside gap at 172.87 got filled today. NEM has downside gaps at 42.29, 41.52.

Gold and silver had two Cyclical Bear Markets in the previous Secular Bull Market that peaked in 1980, corresponding to Elliott Wave 2 and 4 downcycles, see http://tradethecycles.blogspot.com/2008/03/gold-and-silvers-two-cyclical-bear.html.

Concerning HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal, see http://stockcharts.com/charts/gallery.html?%24xau. The multi month uptrend lines broke down and 5%+ follow through occurred to the downside. HUI/XAU/gold (gold might lag and peak in rollover mode) are in the midst of a major intermediate term downcycle, that's probably the start of an 18 monthish Wave 2 Cyclical Bear Market. HUI/XAU/gold will probably fall -50%+ in this bear market. Got cycles?

HUI/XAU very likely put in an intermediate term and 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.

For the five day NEM Lead Indicator see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.

The rest of the info is for reference purposes or for new readers.

Gold's primary Secular Bull Market (since April 2001) uptrend line is at $500ish, see chart two at http://www.joefrocks.com/GoldStockCharts.html.

The severe weakness/action recently tells us something, just as the severe weakness/5% sell signal that occurred in May 2006 was a good one, since HUI/XAU/gold (http://stockcharts.com/charts/gallery.html?%24xau) were underwater versus the May 2006 cycle high for about 17 months.

A rollover long term upcycle was in effect from June 2006 (from October 2006 for the XAU, http://stockcharts.com/charts/gallery.html?%24xau) until the recent cycle highs, that was probably the Wave 1 Cyclical Bull Market (began in late 2000 for HUI/XAU and in April 2001 for gold, which was a slightly higher bullish double bottom with the 1999 cycle low) peaking in dramatic rollover mode versus the May 2006 cycle high. One can only discuss likely scenarios, not certainties.

The real estate/too easy mortgage boom from 2002 until early 2006 was very inflationary. The current bust is obviously the diametric opposite/very deflationary. Combined with plummeting major world stock markets, many annihilated financial stocks, plummeting money market rates and bond yields, plummeting credit/debt instruments, tight credit and mortgage lending, real estate bust, etc and it's pretty obvious that the environment is very deflationary.

.......http://www.JoeFROCKS.com/ .

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Wednesday, April 23, 2008

.......Gold's Wave 1 Cyclical Bull Market Cycle High

Gold probably entered a Wave 2 Cyclical Bear Market after the 3-17 cycle high at $1033.90, see http://stockcharts.com/charts/gallery.html?%24gold. Note the very large bearish spike on 3-17-08's candle.

A slightly lower or higher bearish double top cycle high might occur in a few weeks/months, but, gold has likely entered an 18 monthish Wave 2 Cyclical Bear Market, in which it should fall to $500-550, which is about where it's primary multi year Secular Bull Market uptrend line since April 2001 is.

To my knowledge I am the only one who is anticipating a protracted gold Bear Market now, which jives with the very deflationary worldwide economic/financial markets.

The real estate/too easy mortgage boom from 2002 until early 2006 was very inflationary. The current bust is obviously the diametric opposite/very deflationary. Combined with plummeting major world stock markets, many annihilated financial stocks, plummeting money market rates and bond yields, plummeting credit/debt instruments, real estate bust, etc and it's pretty obvious that the environment is very deflationary.

.......http://www.JoeFROCKS.com/ .

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Today's SPX (S & P 500) Cycle High Was Probably Wave B Of The Short Term Wave 2 Downcycle Since Friday 4-18

Today's SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) cycle high was probably a countertrend Wave B cycle high of the short term Wave 2 downcycle since Friday 4-18, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c.

Yesterday it looked like Wave 2 had bottomed, because, SPX had completed an Elliott Wave ABC down up down pattern and the WMT Lead Indicator was a very bullish +1.18% versus SPX yesterday 4-22 (+0.36% today).

The reasons why it looks like a short term Wave 2 downcycle is still in progress are:

1. SPX failed to do an Elliott Wave 12345 up down up down up pattern from mid session yesterday 4-22's cycle low to early today 4-23's cycle high, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c. The intraday Wave 2 cycle low late yesterday was slightly below the orignal cycle low that occurred at mid session yesterday.

2. The plunge that occurred after today's cycle high appears to be a Wave A type decline, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=. Also, the late rebound today appears to be an anemic countertrend Wave B type rebound. Reliable lead indicator Walmart's (WMT) rebound was anemic also in the second half of the session, see http://finance.yahoo.com/q/ta?s=WMT&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c.

3. Looking at the daily SPX (S & P 500) chart, see http://stockcharts.com/charts/gallery.html?%24spx, the two day decline/Elliott Wave ABC down up down pattern (can be seen on 5 day intraday chart) appears to be Wave A of the short term Wave 2 since Friday 4-18, and, today's rebound/spike on the daily candle looks like a Wave B type move. Also, it looks like the large spike move that occurred in the short term Wave 1 from 4-15 to 4-18 needs to correct more.

4. VIX, the SPX Volatility Index, fell -2.92% today 4-23 versus SPX rising only +0.29%, which is a sharp +2.63% rise in complacency that points to a likely sharp decline tomorrow, since the SPX wall of worry fell -2.63% = -2.92% + +0.29%.

5. NDX's (NASDAQ 100) short term Wave 1 peaked on Monday and today's slightly lower cycle high/bearish double top looks like a Wave B of Wave 2 cycle high, and, confirms/jives with the SPX analysis, see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

It looks like NDX will fill today 4-23's downside gap at 1881.65 early tomorrow, and, might make a run at Friday's downside gap at 1840.88, which appears to be a bullish breakaway gap. If 1840.88 doesn't get filled then NDX appears to be the best long trade (I'd use QLD, the Ultra Long QQQQ ETF) for the short term Wave 3 upcycle that will probably begin early to mid session tomorrow.

So, it looks like SPX will try to fill it's downside gap at 1365.56 early tomorrow.
RUT (Russell 2000) will probably try to fill it's downside gap at 692.06 early tomorrow.

There might be a good opportunity to day trade SPX/NDX/RUT short early tomorrow. I will look to trade SDS, QID, or TWM early tomorrow, and I'll look to trade SSO, QLD, UWM later on once I'm convinced that a short term Wave 3 has begun.

Today I traded UWM in the second half of the session (bought at 49.8499 and sold at 49.90), but, quickly sold when I realized that a short term Wave 2 downcycle was probably in effect. I nearly caught the big spike move/likely Wave B type spiking action early in the session, but, it took off like a rocket and I didn't get the expected pullback/entry point, see http://finance.yahoo.com/q/ta?s=uwm&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

SPX (S & P 500) and NDX (NASDAQ 100) put in Wave A intermediate term cycle (since 10-11-07 for SPX and late October 2007 for NDX) lows on 3-17, while RUT (Russell 2000) did so on 3-10, see http://stockcharts.com/charts/gallery.html?%24spx for SPX.

The Upside Surprise/Rollover Barometer is at "Likely" due to the aggressive Fed credit extended since 2-28-08, that fuels index related program buying ("only" 70% of the dollar volume on the NYSE), see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.

A Cyclical Bear Market probably 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).

SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=. SPX (S & P 500) has a bullish breakaway gap at 1276.60 from 3-18's open and WMT has one at 49.95 from 3-18's open.

The XAU's (http://stockcharts.com/charts/gallery.html?%24xau) short term countertrend Wave B upcycle since 3-20 (HUI/gold since 4-1) has done an Elliott Wave 12345 up down up down up pattern, and, probably/very likely peaked on 4-17 (bearish double top with 4-16), and, the Wave B trendline broke down today. The XAU filled it's downside gap at 184.35 today 4-23 and GDX filled 46.39.

Wave A of a short term Wave C since 4-17 might have bottomed late today or might do so early tomorrow 4-24, see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c. The NEM Lead Indicator was a very bullish +1.67% versus the XAU today 4-23.

The XAU had a large bearish spike on yesterday 4-22's bearish black candle, which indicated a close below the open (the black candle indicates a close below the open), see http://stockcharts.com/charts/gallery.html?%24xau. Also, the NEM Lead Indicator was a bearish -0.65% versus the XAU on 4-22 and was a very bearish -1.43% on 4-21.

The XAU has a downside gap at 172.87. NEM has downside gaps at 42.29, 41.52.

I'll be looking to short the Gold Miners ETF GDX and might buy some GDX/XAU puts late in Wave B/early in Wave C of the short term Wave C (began 4-17).

From HUI's 5 day intraday candlestick chart it looks like there might be brief early weakness on Thursday 4-24 followed by strength, see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

Gold and silver had two Cyclical Bear Markets in the previous Secular Bull Market that peaked in 1980, corresponding to Elliott Wave 2 and 4 downcycles, see http://tradethecycles.blogspot.com/2008/03/gold-and-silvers-two-cyclical-bear.html.

Concerning HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal, see http://stockcharts.com/charts/gallery.html?%24xau. The multi month uptrend lines broke down and 5%+ follow through occurred to the downside. HUI/XAU/gold (gold might lag and peak in rollover mode) are in the midst of a major intermediate term downcycle, that's probably the start of an 18 monthish Wave 2 Cyclical Bear Market. HUI/XAU/gold will probably fall -50%+ in this bear market. Got cycles?

HUI/XAU very likely put in an intermediate term and 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.

For the five day NEM Lead Indicator see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.

The rest of the info is for reference purposes or for new readers.

Gold's primary Secular Bull Market (since April 2001) uptrend line is at $500ish, see chart two at http://www.joefrocks.com/GoldStockCharts.html. The severe weakness/action recently tells us something, just as the severe weakness/5% sell signal that occurred in May 2006 was a good one, since HUI/XAU/gold (http://stockcharts.com/charts/gallery.html?%24xau) were underwater versus the May 2006 cycle high for about 17 months.

A rollover long term upcycle was in effect from June 2006 (from October 2006 for the XAU, http://stockcharts.com/charts/gallery.html?%24xau) until the recent cycle highs, that was probably the Wave 1 Cyclical Bull Market (began in late 2000 for HUI/XAU and in April 2001 for gold, which was a slightly higher bullish double bottom with the 1999 cycle low) peaking in dramatic rollover mode versus the May 2006 cycle high. One can only discuss likely scenarios, not certainties.

The real estate/too easy mortgage boom from 2002 until early 2006 was very inflationary. The current bust is obviously the diametric opposite/very deflationary. Combined with plummeting major world stock markets, many annihilated financial stocks, plummeting money market rates and bond yields, plummeting credit/debt instruments, real estate bust, etc and it's pretty obvious that the environment is very deflationary.

.......http://www.JoeFROCKS.com/ .

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Tuesday, April 22, 2008

SPX/NDX/RUT Appear To Have Put In A Short Term Wave 2 Cycle Low Today

SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx)/NDX (NASDAQ 100)/RUT (Russell 2000) appear to have put in a short term Wave 2 cycle low today (monthly cycle low on 4-15 and intermediate term cycle low on 3-17), see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, which jives with the very bullish Walmart (WMT) Lead Indicator, at +1.18% versus SPX today 4-22, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=1d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC. Also, the SPX wall of worry/fear grew by +0.97% today (discussed later), which points to some significant strength tomorrow.

Watch downside gaps at 1365.56 for SPX, at 1840.88 for NDX, and, at 692.06 for RUT, in case more downside/short term Wave 2 downcycle occurs tomorrow.

RUT (Russell 2000) appears to have completed an Elliott Wave ABC down up down short term Wave 2 downcycle since mid session on Friday, see http://finance.yahoo.com/q/ta?s=%5Erut&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c, and, clearly appears to have begun a very short term Elliott Wave 12345 up down up down up upcycle, ending the session in Wave 3 peaking, so, early tomorrow a good RUT long day trading opportunity/entry point may arise in an intraday Wave 4 downcycle. I'll be looking to trade RUT ultra long early tomorrow via UWM. RUT appears to be a better long trade than SPX or NDX right now.

VIX rose a significant +1.85% today/on 4-22 versus the S & P 500 falling a significant -0.88% on 4-22, which is a significant +0.97% rise in fear (the SPX wall of worry grew by +0.97% = +1.85% + -0.88% = +0.97% rise in fear) that points to some significant strength on Wednesday 4-23.

SPX (S & P 500) and NDX (NASDAQ 100) put in Wave A intermediate term cycle (since 10-11-07 for SPX and late October 2007 for NDX) lows on 3-17, while RUT (Russell 2000) did so on 3-10, see http://stockcharts.com/charts/gallery.html?%24spx for SPX.

The Upside Surprise/Rollover Barometer is at "Likely" due to the aggressive Fed credit extended since 2-28-08, that fuels index related program buying ("only" 70% of the dollar volume on the NYSE), see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.

A Cyclical Bear Market probably 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).

SPX created a bullish breakaway gap at 1322.70 on 4-1 and WMT created one at 52.68, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=on&z=l&q=c&p=&a=p12,fs,w14&c=. SPX (S & P 500) has a bullish breakaway gap at 1276.60 from 3-18's open and WMT has one at 49.95 from 3-18's open.

The XAU's (http://stockcharts.com/charts/gallery.html?%24xau) short term countertrend Wave B upcycle since 3-20 (HUI/gold since 4-1) has done an Elliott wave 12345 up down up down up pattern, and, appears to have peaked, but, the Wave B trendline hasn't broken down yet, but, looks like it might tomorrow.

The XAU has a large bearish spike on today's bearish black candle, which indicates a close below the open (the black candle indicates a close below the open), see http://stockcharts.com/charts/gallery.html?%24xau.

Also, the NEM Lead Indicator was a bearish -0.65% versus the XAU today/on 4-22 and was a very bearish -1.43% on 4-21.

GDX filled it's downside gap at 48 today, now watch the one at 46.39. The XAU has downside gaps at 184.35 and 172.87. NEM has downside gaps at 42.29, 41.52.

I'll be looking to short the Gold Miners ETF GDX or NEM/GLD early on Wednesday.

The huge HUI/XAU/gold very short term Wave A downcycle (HUI fell -18.29% in a little under three sessions) five weeks ago triggered a very important 5% follow through major sell signal, see http://stockcharts.com/charts/gallery.html?%24xau.

From HUI's 5 day intraday candlestick chart (intraday Elliott Wave count, Wave A downcycle type move in the second half of the session) it looks like there will/might be brief early weakness on Wednesday 4-23 followed by some probably brief intraday Wave B strength/potential entry point for a short trade tomorrow 4-23, see http://finance.yahoo.com/q/ta?s=%5Ehui&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c.

Gold and silver had two Cyclical Bear Markets in the previous Secular Bull Market that peaked in 1980, corresponding to Elliott Wave 2 and 4 downcycles, see http://tradethecycles.blogspot.com/2008/03/gold-and-silvers-two-cyclical-bear.html.

Concerning HUI/XAU/gold, the important thing now is that HUI/XAU/gold hit a 5% follow through major sell signal, see http://stockcharts.com/charts/gallery.html?%24xau. The multi month uptrend lines broke down and 5%+ follow through occurred to the downside. HUI/XAU/gold (gold might lag and peak in rollover mode) are in the midst of a major intermediate term downcycle, that's probably the start of an 18 monthish Wave 2 Cyclical Bear Market. HUI/XAU/gold will probably fall -50%+ in this bear market. Got cycles?

HUI/XAU very likely put in an intermediate term and 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.

For the very bearish five day NEM Lead Indicator see http://finance.yahoo.com/q/ta?s=%5EXAU&t=5d&l=on&z=l&q=l&p=&a=&c=%5Ehui,nem.

The rest of the info is for reference purposes or for new readers.

Gold's primary Secular Bull Market (since April 2001) uptrend line is at $500ish, see chart two at http://www.joefrocks.com/GoldStockCharts.html.

The severe weakness/action recently tells us something, just as the severe weakness/5% sell signal that occurred in May 2006 was a good one, since HUI/XAU/gold (http://stockcharts.com/charts/gallery.html?%24xau) were underwater versus the May 2006 cycle high for about 17 months.

A rollover long term upcycle was in effect from June 2006 (from October 2006 for the XAU, http://stockcharts.com/charts/gallery.html?%24xau) until the recent cycle highs, that was probably the Wave 1 Cyclical Bull Market (began in late 2000 for HUI/XAU and in April 2001 for gold, which was a slightly higher bullish double bottom with the 1999 cycle low) peaking in dramatic rollover mode versus the May 2006 cycle high. One can only discuss likely scenarios, not certainties.

The real estate/too easy mortgage boom from 2002 until early 2006 was very inflationary. The current bust is obviously the diametric opposite/very deflationary. Combined with plummeting major world stock markets, many annihilated financial stocks, plummeting money market rates and bond yields, plummeting credit/debt instruments, real estate bust, etc and it's pretty obvious that the environment is very deflationary.

.......http://www.JoeFROCKS.com/ .

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