The SPX (S & P 500) Countertrend Short Term Wave 2 Upcycle Appears To Have Peaked Late Today

The SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) countertrend Short Term Wave 2 Upcycle since late yesterday 3-30-09 appears to have peaked late today, see http://finance.yahoo.com/q/ta?s=^GSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, which means that the upside gap at 815.94 from yesterday's open is probably a bearish breakaway gap, and, broad market Lead Indicator Walmart's (WMT) upside gap at 52.57 appears to also be a bearish breakaway gap.

So, a short term Wave 3 downcycle/very large move down probably began late today 3-31-09. Watch downside gaps at 790.88 from today 3-31's open, and, at 768.54, then 676.53.

Today's broad market Walmart (WMT) Lead Indicator was a bearish -0.65% versus the S & P 500 (SPX) on 3-31.

Also, SPX (S & P 500) experienced a significant +1.76% rise in complacency/-1.76% decline in the wall of worry today 3-31, since SPX (S & P 500) rose +1.31% versus the SPX Volatility Index VIX falling -3.07%, which points to likely significant/maybe severe SPX (S & P 500)/market weakness early on Wednesday 4-1-09.

Broad market Lead Indicator Walmart (WMT) put in a large bearish spike shortly before session's end again today 3-31-09, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=.

The five day intraday broad market Walmart (WMT) Lead Indicator was extremely bullish at session's end today 3-31-09, 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, which is a very short term bearish indication.

The broad market Walmart (WMT) Lead Indicator is extremely bearish since 3-6-09, at -0.65% versus SPX (S & P 500) today/on 3-31, +1.94% on 3-30, +1.67% on 3-27, -0.24% on 3-26, +0.22% on 3-25, +1.23% on 3-24, -3.27% on 3-23, +1.26% on 3-20, +0.33% on 3-19, -1.21% on 3-18, -0.75% on 3-17, -0.44% on 3-16, -0.26% on 3-13, -0.95% on 3-12, -2.73% on 3-11, -3.93% on 3-10, -1.86% on 3-9, -1.81% on 3-6.

The SPX (S & P 500) inverse Elliott Wave 12345 down up down up down downcycle from very late on 3-26-09 to late yesterday 3-30-09 was a short term Wave 1 downcycle, see http://finance.yahoo.com/q/ta?s=^GSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, that was probably the start of a Wave C Minor Intermediate Term Downcycle, which is Wave C down of the Intermediate Term Downcycle since 1-6-09.

In SPX's (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx) daily chart one can see the Short Term Wave 1 Downcycle that bottomed yesterday 3-30, and, one can see the Short Term Wave 2 Upcycle since late yesterday 3-30-09, that probably peaked late today, note the medium bearish spike on today's candle.

The S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) COT (Commitments Of Traders) data reeks of countertrend Wave B Monthly Upcycle from 3-6-09 to 3-26-09 (countertrend Wave B up of the intermediate term downcycle since 1-6-09), see the major averages COT data that starts about two thirds of the way down (S & P 500 is the first set of data) at http://www.cftc.gov/dea/futures/deacmelf.htm.

The savvy non contrarian S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) and other major averages Commercial Traders experienced a gigantic short squeeze, since they covered a massive amount of short futures, but, they also liquidated a massive amount of their long futures position, which strongly jives with the monthly upcycle from 3-6-09 to 3-26-09 being countertrend action. Why would they liquidate a massive amount of their long futures position, if they believed that a new bull market had begun?

Given that it's very unlikely that the S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) Cyclical Bear Market since 10-11-07 bottomed on 3-6-09, then, the upcycle from 3-6-09 to 3-26-09 basically HAS to be countertrend action.

Late today I entered a tiny FAZ (3x Finance Bear ETF) position at 20.70 (21.20 after hours) in an IRA.

My strategy this week will be to day trade DUG (UltraShort Oil and Gas ETF) or some other ultra short ETF (like FAZ maybe), overnight trade a substantial ultra short position, and, I'll also overnight trade a tiny FAZ (3x Finance Bear ETF) position in an IRA. For the overnight trades I'll be careful to wait for a very large Wave A down type move to occur first (in progress), then I'll look to go long QID/FAZ shortly after a countertrend Wave B type upcycle peaks.

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

WMT has bearish breakaway upside gaps at 52.12 (filled 3-25), 52.57, and 55.54, and, has a bullish breakaway downside gap at 51.68 from 3-26-09's open (filled 3-30-09).

SPX (S & P 500) has bearish breakaway upside gaps at 712.87 (filled 3-10-09), 735.09 (filled 3-12-09), 752.83 (filled 3-13-09), 826.84 (filled 3-26-09), 815.94 (created 3-30-09), 869.89, and 934.70, see http://stockcharts.com/charts/gallery.html?%24spx. SPX (S & P 500) has a downside gap at 813.88 from 3-26's open (filled 3-30-09), one at 790.88 from 3-31-09's open, one at 768.54 from 3-23-09's open, and, one at 676.53 from 3-10-09's open.

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 substantial weakness for WMT/SPX and the market/most indexes/sectors.

The XAU is doing Wave 4 down of a big short term Wave 3 upcycle, of the monster Wave 5 rollover monthly upcycle (of the Wave 1 Minor Intermediate Term Upcycle since late October 2008) since early March, see the XAU at http://stockcharts.com/charts/gallery.html?%24xau. GDX/HUI are doing a short term Wave 4 downcycle.

The slightly lower XAU cycle high in mid March, versus the one in early March, is probably Wave 1 up of a big short term Wave 3 upcycle, note that it's slightly lower than the short term Wave 1 cycle high in early March.

This GDX/HUI/XAU Wave 4 down move since 3-26-09 is correcting the huge spike move that began after the FOMC on 3-18-09, so, this weakness makes perfect sense. As I've said before, the next week or two should be very interesting on the upside.

The monster spike move on 3-18-09, following the huge $1 Trillion Fed action announced after the FOMC, was a short term breakout.

Also, the reliable gold/silver sector NEM Lead Indicator has turned extremely bullish since the 3-18-09 GDX/HUI/XAU/NEM (http://stockcharts.com/charts/gallery.html?%24xau) short term breakout, at -1.62% versus the XAU today/on 3-31, +0.87% on 3-30, +0.38% on 3-27, +1.54% on 3-26, +1.43% on 3-25, +0.07% on 3-24, +0.00% on 3-23, +3.26% on 3-20, +1.39% on 3-19, +0.89% on 3-18.

Also, one must factor in the fact that the broad market Walmart (WMT) Lead Indicator has turned extremely bullish since Tuesday 3-24-09, at -0.65% versus the S & P 500 today/on 3-31, +1.94% on 3-30, +1.67% on 3-27, -0.24% on 3-26, +0.22% on 3-25, +1.23% on 3-24, and, the five day intraday broad market Walmart (WMT) Lead Indicator closed at extremely bullish today 3-31-09 (+2.00% or more versus the S & P 500), see http://finance.yahoo.com/q/ta?s=^HUI&t=5d&l=off&z=l&q=l&p=&a=m26-12-9,p12,fs,w14&c=wmt,^GSPC.

The gold COT (Commitments Of Traders) data continues to jive with a short term bullish and an intermediate term bearish scenario, see the third/last data at http://www.cftc.gov/dea/options/deacmxsof.htm, since the savvy non contrarian gold Commercial Traders traded a respectable long gold futures and options position in the five day period ending 3-24-09, while adding even more short gold futures and options, in anticipation of a substantial correction/intermediate term downcycle.

GDX (Gold Miners ETF, http://stockcharts.com/charts/gallery.html?gdx) has downside gaps at 31.34 (filled 3-18), 29.67, 29.13, 25.41, and 23.23. GDX has a very bullish breakaway downside gap at 35.07. NEM has downside gaps at 36.66 (filled 3-17) and TBD, and, has a downside bullish breakaway gap at 40.14 from 3-19's open.

Gold hit a 5% major buy signal nine weeks ago, 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.

The XOM (Exxon Mobil) Lead Indicator was a very bearish -1.04% versus the XOI (AMEX Oil and Gas) today/on 3-31, it was +1.96% on 3-30, it was +1.27% on 3-27, +0.70% on 3-26, +0.04% on 3-25, +0.82% on 3-24, -0.15% on 3-23, +0.13% on 3-20, -3.32% on 3-19, -0.46% on 3-18, +0.00% on 3-17, -0.58% on 3-16, +1.09% on 3-13, -0.78% on 3-12, -1.90% on 3-11, -1.22% on 3-10, +0.66% on 3-9, +1.10% on 3-6, -0.63% on 3-5, -2.98% on 3-4, -0.38% on 3-3, +2.68% on 3-2, -1.89% on 2-27, -1.51% on 2-26, +0.65% on 2-25, -0.64% on 2-24, +1.04% on 2-23, +1.43% on 2-20, -0.02% on 2-19, +1.94% on 2-18, +2.00% on 2-17, -1.14% on 2-13, +0.44% on 2-12, -1.99% on 2-11, +0.77% on 2-10, -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 Cyclical Bear Market from/since 2004 for example (has been in a multi decade Secular Bear Market also), 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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