SPX (S & P 500)/The Market Is Still Heading Down

SPX (S & P 500, http://stockcharts.com/charts/gallery.html?%24spx)/the market is still heading down, see the five day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=%5EGSPC&t=5d&l=off&z=l&q=c&p=&a=m26-12-9,p12,fs,w14&c=.

After an early plunge SPX (S & P 500) did a rollover type (Waves 3 and 5 formed a bearish intraday double top) countertrend Wave B Elliott Wave 12345 up down up down up upcycle.

After the intraday countertrend Wave B move peaked late in the session, SPX (S & P 500) was doing Wave 4 up of a Wave A of Wave C type move at session's end, so, a brief countertrend Wave B rebound is likely early tomorrow, after probably significant weakness at the open/very early on. There should be a good entry point for day trading short early tomorrow.

SPX (S & P 500)/the market is extremely oversold (RSI, Stochastics, Williams %R), see http://stockcharts.com/charts/gallery.html?%24spx. However, from looking at today 3-3-09's bearish candle, that doesn't even have a small inverse spike, let alone a large bullish one, today probably wasn't an important cycle low.

The broad market Walmart (WMT) Lead Indicator was bearish today, at
-0.73% versus SPX (S & P 500) on 3-3, it was +2.22% versus SPX (S & P 500) on 3-2, which correctly was a very short term bearish indication, it was +4.41% on 2-27, which correctly was a very short term bearish indication. It was -0.37% versus SPX (S & P 500) on 2-26, and, it was -0.53% versus SPX (S & P 500) on 2-25, it was a very bearish -1.70% versus SPX (S & P 500) on 2-24.

Also, SPX (S & P 500) experienced a very sharp +3.91% rise in complacency/-3.91% decline in the wall of worry today 3-3, since SPX (S & P 500) fell -0.64% versus the SPX Volatility Index VIX falling -3.27%, which points to likely severe SPX (S & P 500)/market weakness early on Wednesday 3-4-09.

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

Broad market Lead Indicator WMT has a large bearish spike on a bearish red (close below the open) candle yesterday 3-2-09, see http://stockcharts.com/charts/gallery.html?wmt.

SPX (S & P 500) is in a Short Term Wave 5 Downcycle (since very late 2-25-09) of the Wave C Monthly Downcycle since 1-28-09 (Wave A Minor Intermediate Term Downcycle since 1-6-09), see http://stockcharts.com/charts/gallery.html?%24spx. Since 1-28-09 there's a down up down up down pattern, with Wave 4 up peaking very late on 2-25-09.

I'll be looking to day trade ultra short early tomorrow via DUG (UltraShort Oil and Gas ETF), SRS (UltraShort Real Estate ETF), FAZ (3x Finance Bear ETF), QID (UltraShort NASDAQ 100 (NDX) ETF), SMN (UltraShort Basic Materials ETF) etc. I also might look at the UltraShort Gold ProShares (GLL) ETF.

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

Today I day traded SRS (UltraShort Real Estate ETF, 1 minute 7 second trade), and, I made 36.20 cents/share = $362 for each 1000 shares traded.

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.

I'll probably wait for the NASDAQ 100 (NDX) to do a short term countertrend Wave B upcycle, before trading/holding a QID position overnight.

WMT has bearish breakaway upside gaps at 52.12, and 55.54, and, has a downside bullish breakaway gap at 46.53 (created 2-17-09). SPX (S & P 500) has bearish breakaway upside gaps at 735.09, 752.83, 826.84, 869.89, 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 for WMT/SPX and the market/most indexes/sectors.

GDX/HUI/XAU are/were in Wave 5 down of the big short term Wave A Downcycle since 2-17-09's Wave 1 Minor Intermediate Term cycle high (Wave A down (appears to have bottomed today 3-3-09) 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 bearish -0.95% versus the XAU today/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, -1.20% on 2-13, +0.34% on 2-12, +0.61% on 2-11.

The bearish short term and minor intermediate term scenario jives with the bearish gold COT (Commitments Of Traders) data the past five weeks. The savvy non contrarian gold Commercial Traders traded aggressively short for four straight weeks prior to last week, when they traded significantly net long, see the third/last data at http://www.cftc.gov/dea/options/deacmxsof.htm, but, they added modestly to their short position.

GDX (Gold Miners ETF, http://stockcharts.com/charts/gallery.html?gdx) has downside gaps at 35.68 (filled 2-19), 31.46 (filled 3-2), 29.13, 25.41, and 23.23. NEM has downside gaps at 40.79 (filled 2-24) and 39.35 (filled 2-26).

Gold hit a 5% major buy signal five 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 modestly bearish -0.38% versus the XOI (AMEX Oil and Gas) today/on 3-3, it was +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/

NEM XAU HUI