The SPX (S & P 500) Short Term Countertrend Wave 4 Upcycle Probably Peaked Today

The SPX (S & P 500, http://stockcharts.com/h-sc/ui?s=%24spx) short term countertrend Wave 4 upcycle since 3-6-09 probably peaked today 3-16-09, see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=. SPX (S & P 500) broke it's intraday uptrendline today, and, has a medium bearish spike on a bearish red candle (close below the open).

SPX (S & P 500) was doing a Wave A down type move at session's end, 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=, that looks like it'll bottom early tomorrow 3-17-09.

It looks like I'll enter an overnight QID and FAZ trade tomorrow, after an intraday countertrend Wave B type upcycle peaks (can't rule out NDX or the DJUSFN peaking in rollover mode tomorrow, versus today 3-16's cycle high).

My strategy this week will be to day trade DUG (UltraShort Oil and Gas ETF), overnight trade a substantial QID (UltraShort QQQ (NDX basically) ProShares) position, and, I'll also overnight trade a tiny FAZ (3x Finance Bear ETF) position in an IRA.

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

Broad market Lead Indicator Walmart (WMT, http://stockcharts.com/h-sc/ui?wmt) probably put in a short term countertrend Wave B cycle high at 49.55 today 3-16-09 just after the open, see http://finance.yahoo.com/q/ta?s=wmt&t=5d&l=on&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. At mid session WMT put in an intraday countertrend Wave B type cycle high, note the large bearish spike, and, at session's end WMT was in Wave 3 down of a Wave C down type move.

The broad market WMT Lead Indicator is super bearish recently, at -0.44% versus SPX (S & P 500) today/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, which jives with a very large Wave 5 type downcycle occurring this week (Wave 5 down of the Wave C monthly downcycle since late January).

The super bullish broad market Walmart (WMT) Lead Indicator on Thursday 3-5-09, at +6.85% versus SPX (S & P 500), correctly pointed to a very large countertrend Wave 4 upcycle.

The five day intraday broad market Walmart (WMT) Lead Indicator is super bearish at today 3-16-09's close, 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 jives with some severe weakness this week, since SPX (S & P 500)/the market probably peaked today 3-16-09.

The latest S & P 500 (SPX, http://stockcharts.com/h-sc/ui?s=%24spx) COT (Commitments Of Traders) data jives with a very large move down occurring this week (Wave 5 down of the Monthly Downcycle since late January). See the SPX COT data about two thirds of the way down (or do edit find S & P 500 in your browser) at http://www.cftc.gov/dea/futures/deacmelf.htm.

The savvy non contrarian S & P 500 (SPX) Commercial Traders anticipated last week's monster rise, adding a massive 31,172 long futures contracts in the five day period ending 3-10-09, but, they added even more short futures contracts in the five day period ending 3-10-09, they added a massive 35,332 short futures contracts.

SPX (S & P 500) experienced a sharp +2.91% rise in fear/+2.91% rise in the wall of worry today 3-16, since SPX (S & P 500) fell -0.35% versus the SPX Volatility Index VIX rising +3.26%, which points to likely substantial SPX (S & P 500)/market strength early on Tuesday 3-17-09, after likely early weakness.

In the daily SPX (S & P 500) chart one can see that SPX has done an Elliott Wave 12345 up down up down up pattern since 3-6-09, see http://stockcharts.com/charts/gallery.html?%24spx, with spikes on 3-9's, 3-11's, and today 3-16's candles, corresponding to Wave 1, Wave 3, and Wave 5 cycle highs, of the countertrend Wave 4 upcycle that began on 3-6-09 and probably peaked today 3-16-09.

SPX (S & P 500) filled the last of a series of upside gaps on Friday 3-13-09 (712.87 (filled 3-10-09), 735.09 (filled 3-12-09), 752.83 (filled 3-13-09)), which is another sign that SPX (S & P 500) probably peaked, because, often important cycle highs/lows occur shortly after gap filling action has been completed.

The size of the SPX (S & P 500, http://stockcharts.com/h-sc/ui?s=%24spx) (countertrend Wave 4) upcycle since 3-6-09 is a clear sign that it was probably a countertrend upcycle and not a Wave 1 type upcycle/start of an important upcycle. This type of huge rise in about a week's time is the kind of huge spiking action that occurs near important cycle highs, not very early in important upcycles.

SPX (S & P 500) has a downside gap at 676.53 from 3-10-09's open, which one should watch this week, because, one will probably want to exit a (day trade and maybe also overnight timeframe short positions) short position shortly after that downside gap gets filled.

SPX's (S & P 500) Elliott Wave count is that SPX (S & P 500) is in a Wave C Monthly Downcycle since late January, of the Wave A Minor Intermediate Term Downcycle since 1-6-09, see http://stockcharts.com/charts/gallery.html?%24spx. Wave C down, since late January, has a down up down up pattern on the daily chart, with Wave 4 up probably having peaked today 3-16-09.

If one looks at the second weekly view chart (at http://stockcharts.com/charts/gallery.html?%24spx) one can see that SPX (S & P 500) probably didn't bottom yet/on 3-6-09 (the huge spike move from 3-6-09 to 3-16-09 was probably a countertrend Wave 4 upcycle), because, the inverse spike is too small/not bullish enough, and, the candle is red/bearish, indicating a weekly close below the weekly open.

A good 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 on 2-10-09 at 1286.90 (countertrend Wave B minor intermediate term cycle high), versus early January 2009's cycle high at 1286.08. 2-10-09's cycle high was the countertrend Wave B minor intermediate term upcycle peaking in dramatic rollover mode at 1286.90 (similar to countertrend Wave B action, but, surprising modestly to the upside), versus the early January 2009 cycle high at 1286.08.

WMT has bearish breakaway upside gaps at 52.12, and 55.54, and, has a downside bullish breakaway gap at 48.49 (filled 3-9-09), 46.53 (created 2-17-09). 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, 869.89, and 934.70, see http://stockcharts.com/charts/gallery.html?%24spx. SPX (S & P 500) has a downside gap 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.

GDX/HUI/XAU are in Wave 3 down (an inverse Elliott Wave 12345 down up down up down pattern is likely in Wave C) of a Short Term Wave C Downcycle since 3-6-09, of the Wave 2 Minor Intermediate Term Downcycle since 2-17-09, see http://stockcharts.com/charts/gallery.html?gdx.

The gold ETF GLD (http://stockcharts.com/charts/gallery.html?gld) and gold put in a Wave 1 Minor Intermediate Term cycle high on 2-20-09, lagging GDX/HUI/XAU (peaked 2-17-09) and NEM (peaked 1-26-09, reliably leading GDX/HUI/XAU and GLD/gold as usual) as they tend to do.

Reliable gold/silver sector lead indicator NEM's cycle high at 45.45/candle on 1-26-09, see http://stockcharts.com/charts/gallery.html?NEM, is a Wave 1 minor intermediate term cycle high (cycle began in late November 2008), and, the short term countertrend Wave B upcycle peaked at 45 on 2-20-09.
One needs to wait for a 3 to 6 week GDX/HUI/XAU Wave 2 minor intermediate term downcycle to occur, before a good entry point will arise for long term investors.

The NEM Lead Indicator was a very bearish -1.76% versus the XAU today/on 3-16, it was +1.13% on 3-13, it was a very bearish -1.43% on 3-12, it was -0.78% on 3-11, it was an extremely bearish -2.51% on 3-10, which correctly was a very short term bullish indication, it was +0.55% on 3-9, it was a super bearish -4.07% on 3-6, it was -0.84% on 3-5, it was +0.21% on 3-4, it was -0.95% on 3-3, it was a very bearish -1.38% on 3-2, it was an extremely bullish +2.97% on 2-27, which correctly was a very short term bearish indication, it was -0.07% on 2-26, +0.64% on 2-25, +1.98% on 2-24, +0.19% on 2-23, +3.48% on 2-20, which correctly was a very short term bearish indication (the XAU was down -3.25% on 2-23-09), +0.01% on 2-19, -1.55% on 2-18, +1.95% on 2-17.

The bearish short term and minor intermediate term scenario jives with the bearish gold COT (Commitments Of Traders) data the past seven weeks. The savvy non contrarian gold Commercial Traders traded aggressively short for four straight weeks prior to the last three weeks, when they traded significantly net long, see the third/last data at http://www.cftc.gov/dea/options/deacmxsof.htm, but, they engaged in mostly short covering in the latest report dated 3-10-09. The past three weeks the savvy gold Commercial Traders took some profits on their huge short trade, and, they traded a modest long position. These guys know what they're doing.

GDX (Gold Miners ETF, http://stockcharts.com/charts/gallery.html?gdx) has downside gaps at 31.40 (filled 3-9), 31.34, 29.67, 29.13, 25.41, and 23.23. GDX has bearish breakaway upside gaps at 31.55 (filled), 32.88 (filled). NEM has downside gaps at 36.66 and TBD, and, has an upside bearish breakaway gap at 38.54 from 3-16's open.

Gold hit a 5% major buy signal seven 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 bearish -0.58% versus the XOI (AMEX Oil and Gas) today/on 3-16, it was +1.09% on 3-13, it was -0.78% on 3-12, it was -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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