Trade the Cycles

Wednesday, January 14, 2009

SPX (S & P 500) And Broad Market Lead Indicator Walmart (WMT) Created Potential Bearish Breakaway Gaps At Today's Open

SPX (S & P 500) and broad market lead indicator Walmart (WMT) created potential bearish breakaway upside gaps at 871.79 and 52.12 at today's open, see SPX at http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, and, see WMT at http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=.

It looks like SPX (S & P 500) will probably try, and, will probably fail to fill today's upside gap at 871.79 early tomorrow, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=. Assuming that SPX fails to fill today's upside gap at 871.79, and, possibly even if it does, I'll look to day trade ultra short via probably DUG (UltraShort Oil and Gas ETF) or SRS (UltraShort Real Estate ETF), with SDS/TWM/QID as backups.

Broad market lead indicator Walmart (WMT) has a bearish spike on it's candle for the fourth straight session, see http://stockcharts.com/charts/gallery.html?wmt, and, WMT created a huge very bearish breakaway gap on 1-8, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=. So, it seems likely that SPX (S & P 500) will fail to fill today's upside gap at 871.79 tomorrow.

SPX's (S & P 500) big Wave 3 downcycle since early on 1-9-09, of the Short Term Wave A Downcycle since 1-6-09 (countertrend minor intermediate term cycle (late November 2008 cycle low) high), probably bottomed today, 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=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=.

Since early on 1-9 SPX (S & P 500) did an inverse Elliott Wave 12345 down up down up down pattern, see the 5 day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, which was probably a big Wave 3 type downcycle.

The major clue (that I missed yesterday) that the big Wave 3 type downcycle since early 1-9 didn't bottom yesterday is that yesterday's cycle low was too close to the cycle low on 1-12/the day before, to be a likely Wave 3 down type cycle low.

The likely attempted gap filling action tomorrow should be Wave 4 up of the Short Term Wave A Downcycle since 1-6-09.

The SPX (S & P 500) Volatility Index VIX reveals an unusually large rise in fear today (+13.57%), relative to the very sharp SPX decline of -3.35%, which is an unusually large +10.22% rise in fear/rise in the SPX wall of worry, that points to potentially severe SPX weakness tomorrow, after likely early strength.

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

Broad market lead indicator Walmart (WMT, http://stockcharts.com/charts/gallery.html?wmt) experienced a very bearish huge gap down at 1-8's open, from 1-7's close at 55.54, to 1-8's open at 51.31, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=, which is keeping SPX's (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) bearish breakaway upside gap at 934.70 from 1-7's open company, 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=.

The broad market Walmart (WMT) Lead Indicator was an extremely bullish
+2.28% versus SPX (S & P 500) today/on 1-14, which is a very short term bearish indication, was a very bullish +1.24% on 1-13, was a very bullish +1.89% on 1-12, was an extremely bullish +2.52% on 1-9, and, it was super bearish prior to 1-9, at -7.15% on 1-8, +2.14% on 1-7, -1.67% on 1-6, -0.68% on 1-5, -1.16% on 1-2, +0.42% on 12-31, -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.


SPX (S & P 500) has been in a Cyclical Bear Market since 10-11-07, NDX (NASDAQ 100) has been in a Cyclical Bear Market since very late October 2007, and, RUT (Russell 2000) has been in a Cyclical Bear Market since July 2007.

GDX/HUI/NEM/XAU (http://stockcharts.com/charts/gallery.html?%24xau) are in Wave 5 down of the short term Wave A downcycle since 1-2-09, see GDX at http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. Wave A is doing an inverse Elliott Wave 12345 down up down up down pattern, which is a powerful timing tool.

There's a good possibility that this short term downcycle since 1-2-09 is an entire monthly downcycle for GDX/XAU/NEM, not a short term Wave A downcycle, I need to put more thought into it however. The reliable gold/silver sector NEM Lead Indicator has turned extremely bullish, it was +3.66% versus the XAU today/on 1-14, -2.41% on 1-13, +3.59% on 1-12, +0.57% on 1-9, +2.02% on 1-8.

The length of the short term downcycle (GDX/XAU/NEM since 1-2-09, HUI's Wave 4 monthly downcycle began on 12-17-08), the breakout/major buy signal on 12-10-08, and, the extremely bullish gold/silver sector NEM Lead Indicator, are all factors that lead me to believe that this short term downcycle since 1-2-09 might be an entire monthly downcycle for GDX/XAU/NEM. I'll watch the gold/silver sector NEM Lead Indicator, and, the broad market Walmart (WMT) Lead Indicator the next few days, plus, I'll see how bullish the candle looks (NEM being very important obviously) once this short term downcycle since 1-2-09 bottoms.

GDX/HUI/NEM/XAU (http://stockcharts.com/charts/gallery.html?%24xau) put in a bearish double top on 12-17-08/1-2-09, and, are now declining/in a Wave 4 monthly downcycle, NEM is in a Wave 2 monthly downcycle. HUI peaked on 12-17-08, while GDX/NEM/XAU peaked on 1-2-09. HUI is in Wave C of a Wave 4 monthly downcycle since 12-17-08, GDX/XAU are in Wave A (might be Wave C now) of a Wave 4 monthly downcycle since 1-2-09, and, reliable gold/silver sector lead indicator NEM is in Wave A (might be Wave C now) of a Wave 2 monthly downcycle since 1-2-09.

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.

NEM created a bearish breakaway upside gap at 37.04 at 1-12's open, at 39.55 at 1-7's open, and, at 40.33 at 1-5's open, and, I'll have to see what NEM's downside gaps are. GDX (Gold Miners ETF, http://stockcharts.com/charts/gallery.html?gdx) has downside gaps at 28.67 (it got filled yesterday 1-13), 25.41, and 23.23, some or all of which should get filled in the next week or two. GDX created an upside gap at 33.32 at 1-5's open, that's a bearish breakaway upside gap, and, created ones on 1-7 at 32.61 and on 1-12 at 31.31.

GDX's (Gold Miners ETF, http://stockcharts.com/charts/gallery.html?gdx) Wave 4 monthly downcycle since 1-2-09 might bottom at 22 to 23, shortly after filling the downside gap at 23.23, see http://stockcharts.com/charts/gallery.html?gdx. Often important cycle highs/lows occur shortly after gap filling action has been completed.

The gold/silver sector NEM Lead Indicator was extremely bullish today, at
+3.66% versus the XAU today/on 1-14, which is a very short term bearish indication, it was -2.41% on 1-13, it was +3.59% on 1-12, +0.57% on 1-9, +2.02% on 1-8, -2.85% on 1-7, -0.37% on 1-6, +0.03% on 1-5, -0.57% on 1-2, -0.53% on 12-31, -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 oil and gas sector XOM (Exxon Mobil) Lead Indicator was bullish today, at +0.63% versus the XOI (AMEX Oil and Gas) today/on 1-14, +0.31% on 1-13, it was +1.84% on 1-12, it was +1.33% on 1-9, -1.23% on 1-8, +1.14% on 1-7, -1.66% on 1-6, -0.66% on 1-5, -1.83% on 1-2, +0.55% on 12-31, -1.66% on 12-30, -0.83% on 12-29.

GDX/HUI/XAU (http://stockcharts.com/charts/gallery.html?%24xau) hit a 5% follow through major buy signal on Wednesday 12-10-08 (see annotated chart one at http://www.joefrocks.com/GoldStockCharts.html), 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 GDX/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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1 Comments:

  • Confidence Indicator - A look at playing the bond funds - http://chartsandcoffee.blogspot.com/2009/01/modifed-confidence-index-lqd-v-hyg.html


    Playing the educational stocks - (ESI, APOL, DV) - http://chartsandcoffee.blogspot.com/2009/01/point-of-action-educational-stocks-apol.html

    By Blogger admin, at 12:24 PM  

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