1-28-09's SPX (S & P 500) Cycle High Was a Short Term Countertrend Wave B Cycle High

Today 2-10-09's action confirms that 1-28-09's SPX (S & P 500) cycle high was a short term countertrend Wave B cycle high, see http://stockcharts.com/charts/gallery.html?%24spx, so, SPX (S & P 500) is in a big short term Wave C downcycle since 1-28-09's cycle high, of the Wave A minor intermediate term downcycle since 1-6-09, and, I'm now looking to hold ultra short positions overnight.

Early yesterday 2-9-09 SPX (S & P 500) entered Wave C of the big short term Wave C downcycle since 1-28-09, see http://finance.yahoo.com/q/ta?s=%5Espx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=.

The best short now appears to be the NASDAQ 100 (NDX), see http://stockcharts.com/charts/gallery.html?%24ndx, which put in a slightly higher bearish double top today 2-10-09 at 1286.90 (countertrend Wave B minor intermediate term cycle high), versus early January 2009's cycle high at 1286.08. Today's cycle high was the countertrend Wave B minor intermediate term upcycle peaking in dramatic rollover mode at 1286.90, versus the early January 2009 cycle high at 1286.08.

I'll be looking to day trade NDX ultra short via QID tomorrow, and, I'll look to hold a QID position overnight. I was looking to day trade the S & P 500 (SPX) ultra short today via SDS when volatility exploded, see http://finance.yahoo.com/q/ta?s=SDS&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, which made day trading very risky and difficult, because, it wasn't clear yet whether SPX had peaked on 1-28-09.

NASDAQ 100 (NDX) has a bearish medium spike on a bearish red (close below the open) candle today 2-10-09, see http://stockcharts.com/charts/gallery.html?%24ndx. Also, the Cisco Systems (CSCO) Lead Indicator, at -0.66% versus NDX today/on 2-10, and, at -1.45% on 2-9, jives with NDX being a good short now.

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

Today's very bullish broad market WMT Lead Indicator, at +1.74% versus the S & P 500 (SPX) on 2-10 (-0.86% on 2-9, -0.49% on 2-6, +2.97% on 2-5, -2.16% on 2-4, +1.08% on 2-3, -1.12% on 2-2, +0.73% on 1-30, +1.52% on 1-29, -3.48% on 1-28), suggests that a substantial SPX/market rebound will occur tomorrow, possibly after early weakness.

Also, fear/the SPX wall of worry rose sharply today 2-10-09, because VIX (SPX Volatility Index) rose +6.94%, versus SPX (S & P 500) falling -4.91%, which is a sharp +2.03% rise in fear/SPX wall of worry, that points to a sharp rebound early tomorrow 2-11-09, possibly after early weakness.

The five day intraday broad market WMT Lead Indicator closed at extremely bullish today (+2.00% or more), which is typically a very short term bearish indication, that points to likely early weakness tomorrow, see http://finance.yahoo.com/q/ta?s=%5EHUI&t=5d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,%5EGSPC.

Broad market lead indicator Walmart (WMT) is probably still in Wave 4 down of the short term upcycle since 2-2 (46.25 cycle low), see http://stockcharts.com/charts/gallery.html?wmt. It looks like WMT will try (probably will fail to fill it until after WMT does/trys to do a Wave 5 up) to fill it's downside gap at 46.42 tomorrow.

WMT gapped down from 49.28 shortly after today 2-10's open, not at the open, which is unusual, but, WMT now has another bearish breakaway upside gap at 49.28, to go along with ones at 49.63, 50.56, 52.12, and 55.54.

SPX (S & P 500) has bearish breakaway upside gaps at 869.89 (created today 2-10) and 934.70, see http://stockcharts.com/charts/gallery.html?%24spx.

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.

Reliable broad market Lead Indicator Walmart's (WMT) huge very bearish breakaway type gap down on 1-8-09 from 55.54, see http://stockcharts.com/charts/gallery.html?wmt, portended the recent/current substantial weakness/short term Wave A and Wave C downcycles for WMT/SPX and the market/most indexes/sectors.

There's a good chance that SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) will take out it's November 2008 cycle low (the 1-6-09 cycle high is a likely countertrend Wave B cycle high), and, that reliable broad market Lead Indicator Walmart (WMT) will take out it's October 2008 cycle low in the next few weeks (the early December 2008 cycle high is a likely countertrend Wave B cycle high).

GDX (Gold Miners ETF) filled it's upside gap at 35.42 from yesterday 2-9's open today, see http://finance.yahoo.com/q/ta?s=gdx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=, in a brief countertrend Wave B move at today's open/very early on.

Then, GDX/HUI/XAU plunged dramatically most of the session, which jives with their cycles/Elliott Wave count, which is Wave C of Wave C of the big short term Wave A downcycle and Wave 2 minor intermediate term downcycle since 1-26-09, see http://stockcharts.com/charts/gallery.html?gdx.

GDX's (Gold Miners ETF) very flat long declining peaks downtrend/Wave 2 minor intermediate term downcycle since 1-26-09, see http://stockcharts.com/charts/gallery.html?gdx, points to a very large decline, because, it's the relatively flat segment of a large downcycle, which jives with the super bearish gold/silver sector NEM Lead Indicator, at -0.43% versus the XAU today/on 2-10, -0.03% on 2-9, -0.76% on 2-6, -0.45% on 2-5, -0.12% on 2-4, -1.14% on 2-3, +2.43% on 2-2, +2.04% on 1-30, -1.97% on 1-29, -5.87% on 1-28, -2.09% on 1-27, -1.35% on 1-26, -0.32% on 1-23.

The bearish short term and minor intermediate term scenario jives with the bearish gold COT (Commitments Of Traders) data the past two weeks. The savvy non contrarian gold Commercial Traders traded aggressively short for the second straight week, see the third/last data at http://www.cftc.gov/dea/options/deacmxsof.htm.

GDX (Gold Miners ETF, http://stockcharts.com/charts/gallery.html?gdx) has downside gaps at 31.46, 29.13, 25.41, and 23.23. NEM had an upside bearish breakaway gap at 41.53 (filled today 2-10).

Notice that both GDX and NEM peaked today 2-10-09 at 35.49 and 41.59, shortly after filling upside gaps at 35.42 and 41.53. Often important cycle highs/lows occur shortly after gap filling action has been completed. It's very important to track and watch gaps. Gaps provide a trading roadmap, when used in concert with cycles and the Elliott Wave count.

The gold ETF GLD put in a likely Wave 1 minor intermediate term cycle high on 2-2-09 (gold did so on 1-30-09), for the upcycle that began in late October 2008, see http://stockcharts.com/charts/gallery.html?gld, versus GDX/HUI/XAU/NEM doing so on 1-26-09, see http://stockcharts.com/charts/gallery.html?gdx, lagging GDX/HUI/XAU/NEM as it tends to do. Note the very large very bearish spike on 2-2's candle.

Gold hit a 5% major buy signal the week before last, see annotated chart two at http://www.joefrocks.com/GoldStockCharts.html, which indicates that gold very likely entered a Wave 3 Cyclical Bull Market in late October 2008.

Note that gold did an inverse Elliott Wave 12345 down up down up down pattern, from the 3-17-08 Wave 1 Cyclical Bull Market cycle high at $1033.90, to the likely Wave 2 Cyclical Bear Market cycle low at $681 in late October 2008, see the second weekly view chart at http://stockcharts.com/charts/gallery.html?%24gold. Note also, that in both the first daily view chart and the second weekly view chart, that gold has a very large bullish inverse spike at the $681 cycle low in late October 2008.

Gold tends to lag GDX/HUI/XAU and NEM, so, it didn't peak on 1-26-09, when GDX/HUI/XAU and NEM did (Wave 1 minor intermediate term cycle high). Also, gold didn't hit a 5% major buy signal until the week before last, versus GDX/HUI/XAU doing so on 12-10-08, see annotated chart one at http://www.joefrocks.com/GoldStockCharts.html.

The savvy non contrarian gold Commercial Traders expected gold to soon peak/put in a Wave 1 minor intermediate term cycle high, lagging GDX/HUI/XAU and NEM, which did so on 1-26-09 (see http://stockcharts.com/charts/gallery.html?nem and http://stockcharts.com/charts/gallery.html?%24hui), since they traded aggressively short the past two weeks, see the third/last data at http://www.cftc.gov/dea/options/deacmxsof.htm.

The XOM (Exxon Mobil) Lead Indicator was a bullish +0.77% versus the XOI (AMEX Oil and Gas) today/on 2-10, it was -1.43% on 2-9, -1.06% on 2-6, +1.50% on 2-5, -1.06% on 2-4, -0.49% on 2-3, +1.86% on 2-2, +0.92% on 1-30, +0.80% on 1-29, -2.15% on 1-28, +0.37% on 1-27, -2.11% on 1-26, -2.41% on 1-23, +1.36% on 1-22, -1.43% on 1-21.

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 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.

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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