The Gold/Silver Sector Short Term Bearish Outlook
HUI/XAU's countertrend Wave B Upcycle of the Wave 4 Monthly Downcycle since 12-17-08 appears to be peaking, and, for GDX/Gold Miners ETF (possibly also for HUI/XAU), the Wave 3 Monthly Upcycle since late November 2008 is peaking in rollover mode versus the 12-17-08 cycle high (it might end up being a near perfect bearish double top), see the XAU at http://stockcharts.com/charts/gallery.html?%24xau, and, see GDX at http://stockcharts.com/charts/gallery.html?gdx.
GDX (Gold Miners ETF)/HUI/XAU did an entire monthly cycle (very short but huge eight session Wave 1 monthly upcycle and a Wave 2 monthly downcycle) from late October until late November 2008, see GDX at http://stockcharts.com/charts/gallery.html?gdx.
The gold/silver sector NEM Lead Indicator has turned extremely bearish, at -0.53% versus the XAU on 12-31-08, -1.01% on 12-30, +1.71% on 12-29, -0.57% on 12-26, +0.16% on 12-24, -1.60% on 12-23, -0.95% on 12-22.
The broad market Walmart (WMT) Lead Indicator, used in concert with the sector lead indicator, has turned extremely bearish, at +0.42% versus the S & P 500 (SPX) on 12-31-08, -2.55% on 12-30, -0.04% on 12-29, -0.70% on 12-26, +0.19% on 12-24, -0.28% on 12-23.
The gold COT (Commitments Of Traders) Data is extremely bearish the past two reports, with the savvy non contrarian gold Commercial Traders adding 11,063 short gold futures and options contracts in the five day (four day short trading week) period ending 12-22-08,
see the third/last data at (will update/change on Friday or Monday) http://www.cftc.gov/dea/options/deacmxsof.htm, and, the savvy non contrarian gold Commercial Traders added a massive
30,657 short gold futures and options contracts in the five day period ending 12-16-08. The clueless contrarian gold Speculators basically did the opposite of the savvy non contrarian gold Commercial Traders in the past two reports.
Also, the S & P 500 (SPX) Volatility Index VIX has collapsed/fallen much more percentagewise in the past two sessions than SPX has risen, at -4.18% on 12-31-08 and -5.17% on 12-30-08, versus SPX rising +2.44% on 12-30-08 and +1.42% on 12-31-08, which points to severe SPX/market weakness during the next session or two at least (very sharp rise in complacency/collapse in fear), which is another major negative for the gold/silver sector, and, of course, is a major negative for the market/most sectors.
As I've discussed in recent market updates (http://tradethecycles.blogspot.com/2008/12/spx-s-p-500-short-term-countertrend.html), the outlook for the entire market is bearish for the next few weeks.
Because of computerized program selling, when SPX (S & P 500) takes a substantial dive, nearly all sectors take a substantial dive, as baskets of SPX stocks get dumped (then baskets of other indexes' stocks get dumped in a cascading fashion, which is what happned in the 1987 crash for example).
NEM and FCX are in SPX (S & P 500), and, other gold/silver stocks are in other indexes. Once significant sustained program selling starts to occur, with SPX (S & P 500) being the lead index, most sectors get hit hard.
When the goofballs (con artists in some cases) masquerading as gold analysts complain about "market manipulation" or "suppression" of gold, it's really massive program selling (GLD and other gold ETFs have securitized gold, effectively making a stock out of it). In recent years program trading has accounted for as much as 70% or more of the dollar volume on the New York Stock Exchange.
See annotated chart one at http://www.joefrocks.com/GoldStockCharts.html to see the 5% major buy signal/breakout that occurred on 12-10-08 for GDX/HUI/XAU, which means that Trade the Cycles the system now indicates that a Wave 2 Cyclical Bear Market cycle low very likely occurred in late October 2008.
It'll take time to inflate the world out of this huge 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.
Nothing discussed on this Blog is a recommendation, or, should be construed as investment advice.
Happy New Year!!!
GDX (Gold Miners ETF)/HUI/XAU did an entire monthly cycle (very short but huge eight session Wave 1 monthly upcycle and a Wave 2 monthly downcycle) from late October until late November 2008, see GDX at http://stockcharts.com/charts/gallery.html?gdx.
The gold/silver sector NEM Lead Indicator has turned extremely bearish, at -0.53% versus the XAU on 12-31-08, -1.01% on 12-30, +1.71% on 12-29, -0.57% on 12-26, +0.16% on 12-24, -1.60% on 12-23, -0.95% on 12-22.
The broad market Walmart (WMT) Lead Indicator, used in concert with the sector lead indicator, has turned extremely bearish, at +0.42% versus the S & P 500 (SPX) on 12-31-08, -2.55% on 12-30, -0.04% on 12-29, -0.70% on 12-26, +0.19% on 12-24, -0.28% on 12-23.
The gold COT (Commitments Of Traders) Data is extremely bearish the past two reports, with the savvy non contrarian gold Commercial Traders adding 11,063 short gold futures and options contracts in the five day (four day short trading week) period ending 12-22-08,
see the third/last data at (will update/change on Friday or Monday) http://www.cftc.gov/dea/options/deacmxsof.htm, and, the savvy non contrarian gold Commercial Traders added a massive
30,657 short gold futures and options contracts in the five day period ending 12-16-08. The clueless contrarian gold Speculators basically did the opposite of the savvy non contrarian gold Commercial Traders in the past two reports.
Also, the S & P 500 (SPX) Volatility Index VIX has collapsed/fallen much more percentagewise in the past two sessions than SPX has risen, at -4.18% on 12-31-08 and -5.17% on 12-30-08, versus SPX rising +2.44% on 12-30-08 and +1.42% on 12-31-08, which points to severe SPX/market weakness during the next session or two at least (very sharp rise in complacency/collapse in fear), which is another major negative for the gold/silver sector, and, of course, is a major negative for the market/most sectors.
As I've discussed in recent market updates (http://tradethecycles.blogspot.com/2008/12/spx-s-p-500-short-term-countertrend.html), the outlook for the entire market is bearish for the next few weeks.
Because of computerized program selling, when SPX (S & P 500) takes a substantial dive, nearly all sectors take a substantial dive, as baskets of SPX stocks get dumped (then baskets of other indexes' stocks get dumped in a cascading fashion, which is what happned in the 1987 crash for example).
NEM and FCX are in SPX (S & P 500), and, other gold/silver stocks are in other indexes. Once significant sustained program selling starts to occur, with SPX (S & P 500) being the lead index, most sectors get hit hard.
When the goofballs (con artists in some cases) masquerading as gold analysts complain about "market manipulation" or "suppression" of gold, it's really massive program selling (GLD and other gold ETFs have securitized gold, effectively making a stock out of it). In recent years program trading has accounted for as much as 70% or more of the dollar volume on the New York Stock Exchange.
See annotated chart one at http://www.joefrocks.com/GoldStockCharts.html to see the 5% major buy signal/breakout that occurred on 12-10-08 for GDX/HUI/XAU, which means that Trade the Cycles the system now indicates that a Wave 2 Cyclical Bear Market cycle low very likely occurred in late October 2008.
It'll take time to inflate the world out of this huge 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.
Nothing discussed on this Blog is a recommendation, or, should be construed as investment advice.
Happy New Year!!!
.......http://www.JoeFRocks.com/
Labels: GDX, Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, XAU
posted by Joe Ferrazzano at
12:02 PM
0 Comments:
Post a Comment
<< Home