An S & P 500 Wave C Minor Intermediate Term Downcycle Probably Began After Early Yesterday's Cycle High At 888.60
An SPX (S & P 500) Wave C Minor Intermediate Term Downcycle probably began after early yesterday's cycle high at 888.60, see http://stockcharts.com/charts/gallery.html?%24spx.
If SPX (S & P 500) fills downside gaps at 855.16 and 825.16 next week, then, one can say that SPX (S & P 500) very likely peaked early yesterday 4-30-09 at 888.60, putting in a likely countertrend Wave B Monthly cycle high (cycle since 3-6-09) in dramatic rollover mode (upcycle running out of gas) versus the cycle high at 875.63 on 4-17-09.
SPX (S & P 500) rose only +1.48% from the cycle high at 875.63 on 4-17-09 to yesterday 4-30-09's potentially important cycle high at 888.60, see http://stockcharts.com/charts/gallery.html?%24spx, with all of the upside occurring in the prior two sessions. Sometimes, what appears to be countertrend Wave B action ends up being rollover action. Market timing obviously isn't an exact science, but, it's definitely a science.
Follow my live updates (the "play by play") at Twitter!, at http://twitter.com/tradethecycles. Highly recommended. I'm having fun and networking, in addition to microblogging my Trade the Cycles work/system and opining about a variety of subjects. I'm tradethecycles at Twitter. Joining is easy, then you follow me by clicking follow. Or, you can simply follow my Twitter web site at http://twitter.com/tradethecycles.
One of today's Tweets: "If the market peaked yesterday, then long trades will increasingly fail by larger percentages over time. Trade in same direction as market."
SPX (S & P 500) did (assuming that SPX peaked yesterday) a Wave 1 down move from early yesterday to early today, see http://finance.yahoo.com/q/ta?s=^GSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, followed by a countertrend Wave 2 up move to 880.48, however, from looking at the one day chart, see http://finance.yahoo.com/q/ta?s=^GSPC&t=1d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, it looks like the Wave 2 up move might peak in rollover mode very early on Monday and take out today's cycle high at 880.48, which should be a great opportunity to trade short.
Nothing discussed on this Blog is a recommendation, or, should be construed as investment advice.
The broad market Walmart (WMT) Lead Indicator closed at a very bearish -1.23% versus the S & P 500 (SPX) today/on 5-1-09.
The very bordering on extremely bullish five day intraday broad market Walmart (WMT) Lead Indicator at session's end today 5-1-09, 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, jives with (probably brief) early strength on Monday, followed by likely severe weakness.
SPX (S & P 500) experienced a sharp +2.75% rise in complacency/-2.75% decline in the wall of worry today 5-1, since SPX (S & P 500) rose +0.54% versus the SPX Volatility Index VIX falling -3.29%, which points to likely significant/potentially severe SPX (S & P 500)/market weakness early on Monday 5-4-09, after likely strength very early on.
The S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) did two very large rollover upcycles since 3-30-09. The one from 3-30-09 until 4-17-09's cycle high at 875.63, and, the one from 4-21-09 until yesterday 4-30's cycle high at 888.60, note the Elliott Wave 12345 up down up down up pattern since 4-21-09.
The DJUSFN put in a countertrend Wave 2 up cycle high yesterday 4-30, see http://stockcharts.com/charts/gallery.html?%24djusfn.
The Dow Jones U.S. Financials Index (DJUSFN) put in a bearish triple top in the week ending 4-17-09, see http://stockcharts.com/charts/gallery.html?%24djusfn, so, the DJUSFN countertrend Wave B Monthly Upcycle since 3-6-09 has probably peaked.
The longer an upcycle takes to peak, and, the larger it's flat topping area is, the larger the ensuing downcycle tends to be, simply because it's usually a larger, longer, more important upcycle. A prime example right now is the DJUSFN (Financials), see http://stockcharts.com/charts/gallery.html?%24djusfn.
Watch the S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) downside gap at 855.16 (from 4-29's open, then 825.16 and 811.08) the next few days.
The savvy non contrarian S & P 500 (SPX) Commercial Traders traded significantly net short, adding 7241 long futures contracts and 16,096 short futures contracts in the five day period ending 4-21-09, see 2/3 of the way down at http://www.cftc.gov/dea/futures/deacmelf.htm, which jives with an important SPX (S & P 500) countertrend Wave B monthly cycle high occurring this week/yesterday in rollover mode.
In the latest report dated 4-28-09, the savvy non contrarian S & P 500 (SPX) Commercial Traders traded modestly net short, see 2/3 of the way down at http://www.cftc.gov/dea/futures/deacmelf.htm, engaging in only a modest degree of short covering (covered 3035 short futures contracts), despite the substantial strength that occurred during the five day period the data covers, which reveals a high level of confidence in the bearish peaking scenario. Also, they engaged in a relatively modest amount of long liquidation (liquidated 5568 long futures contracts), so, they were also in tune with the short term strength that occurred.
The savvy non contrarian S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) Commercial Traders correctly anticipated recent strength, but, they are also anticipating a sharp decline soon.
This week's/yesterday's S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) cycle high will probably be the end of the countertrend Wave B Monthly Upcycle (Wave B up of the Intermediate Term Downcycle since 1-6-09) since 3-6-09, see the five day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=^spx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=.
I'm long FAZ (3x Finance Bear ETF) overnight, purchased on 4-22 at 8.85.
One way to check for a possible market surprise, on a day like today was, or for whatever timeframe one's trading, is to check the S & P 500 (SPX) wall of worry, by comparing SPX to the SPX Volatility Index VIX , see today's comparison at http://finance.yahoo.com/q/ta?s=^GSPC&t=1d&l=off&z=l&q=c&p=&a=fs,p12,fs,w14&c=^vix. VIX works similarly to a lead indicator.
What one needs to do is to compare SPX to VIX, by simply adding them, as I do every day on this Blog after the close. A significant/substantially positive number points to strength (significant/substantial rise in fear) and a significant/substantially negative number points to weakness (significant/substantial rise in complacency), BUT, ANY indicator/tool is secondary to cycles, Elliott Wave patterns, and, gaps.
For an unusually large number, as regular readers know, greater than or equal to + or - 6%, only for a SINGLE SESSION, an unusually large rise in fear points to significant/potentially severe weakness in the next session (maybe the same session if it occurs early enough), and, an unusually large rise in complacency points to significant/potentially substantial strength in the next session (maybe the same session if it occurs early enough).
The collapse in the S & P 500 wall of worry (SPX versus VIX) recently, see http://finance.yahoo.com/q/ta?s=^GSPC&t=3m&l=off&z=l&q=c&p=&a=p12,p12,fs,p12,fs,w14&c=^vix, points to a collapse in SPX soon. Note that when VIX substantially outperforms SPX for a while, substantial SPX strength tends to occur shortly thereafter (since 3-6-09 in this case), and, vice versa.
The broad market Walmart (WMT) Lead Indicator is super bearish since 3-6-09 (countertrend Wave B Monthly Upcycle began), at -1.23% versus the S & P 500 today/on 5-1, +0.00% on 4-30, +1.92% on 4-29, +0.19% on 4-28, +2.35% on 4-27, -3.71% on 4-24, -1.19% on 4-23, -0.98% on 4-22, -0.99% on 4-21, +2.43% on 4-20, -1.64% on 4-17, -2.54% on 4-16, -0.92% on 4-15, +1.21% on 4-14, +1.47% on 4-13, -7.52% on 4-9, -0.76% on 4-8, +0.44% on 4-7, +0.14% on 4-6, -0.67% on 4-3, -1.32% on 4-2, -0.28% on 4-1, -0.65% 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 XOM (Exxon Mobil) Lead Indicator was a very bearish -1.30% versus the XOI today/on 5-1, -0.45% on 4-30, -0.35% on 4-29, +0.92% on 4-28, +1.44% on 4-27, -1.72% on 4-24, -1.57% on 4-23, -0.98% on 4-22, -0.23% on 4-21, +2.60% on 4-20, -1.00% on 4-17, -1.62% on 4-16, +0.95% on 4-15, +0.96% on 4-14, -1.90% on 4-13, -0.66% on 4-9, -0.47% on 4-8, +0.61% on 4-7, +1.71% on 4-6, -0.57% on 4-3, -2.70% on 4-2, -0.27% on 4-1, -1.04% on 3-31, +1.96% on 3-30, +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.
Note that reliable broad market Lead Indicator Walmart (WMT) put in a countertrend Wave B Minor Intermediate Term Cycle High in very early April, see http://stockcharts.com/charts/gallery.html?wmt.
The S & P 500 (SPX) countertrend Wave B Monthly Upcycle since 3-6-09 Elliott Wave count is: A Wave 1 cycle high/red spike occurred on 3-9, a Wave 3 cycle high/red spike occurred on 3-16, then, a deceptive huge Wave 5 Elliott Wave up down up down up rollover upcycle began on 3-17-09, which probably peaked yesterday 4-30-09, see http://finance.yahoo.com/q/ta?s=^GSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=.
SPX's (S & P 500) countertrend Wave B Monthly Upcycle, that began on 3-6-09, is/was Wave B up of the Intermediate Term Downcycle since 1-6-09, see http://stockcharts.com/charts/gallery.html?%24spx.
WMT has bearish breakaway upside gaps at 51.53, 52.61, 53.43, 53.80 and 55.54, and, has a downside gap at 48.47.
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 (filled 4-2-09), 832.86 (filled 4-2-09), has upside gaps at 835.48 (filled), 842.50 (filled), 858.73 (filled), 869.89 (filled), 869.60 (filled), and 934.70, see http://stockcharts.com/charts/gallery.html?%24spx.
SPX (S & P 500) has downside gaps at 851.92 (filled), 855.16, 825.16, 811.08, 768.54, and, one at 676.53.
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.
FAZ (3x Finance Bear ETF) is a great opportunity to probably make a lot of money now (probably for the next few weeks/months), which is why so many are trading it. Not a recommendation.
Follow my live updates at Twitter!, at http://twitter.com/tradethecycles. Highly recommended. I'm having fun and networking, in addition to microblogging my Trade the Cycles work/system and opining about a variety of subjects. I'm tradethecycles at Twitter. Joining is easy, then you follow me by clicking follow after doing a search for tradethecycles. Or, you can simply follow my Twitter web site at http://twitter.com/tradethecycles. I just started using Twitter recently. I'm going to try to make timely live updates at Twitter and make it a real time extension of this Blog. Also, I opine about other subjects.
GDX/HUI/XAU's short term countertrend Wave B upcycle since 4-17-09 appears to have peaked on 4-24-09, see the XAU at http://stockcharts.com/charts/gallery.html?%24xau. For GDX/HUI, see GDX's daily chart. The weakness since 4-24-09 is probably Wave C down of the Wave 2 Intermediate Term Downcycle since 3-26-09 for the XAU (very early April for GDX/HUI).
The five day intraday NEM Lead Indicator closed at extremely bearish, see http://finance.yahoo.com/q/ta?t=5d&s=NEM&l=off&z=l&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=^xau, which is a very short term bullish indication.
GDX/HUI/XAU are probably doing Wave C down since 4-24-09 (the NEM Lead Indicator closed at -4.10% versus the XAU today/on 5-1, +1.00% on 4-30, -1.03% on 4-29, -0.56% on 4-28, +2.63% on 4-27, +1.22% on 4-24, -1.75% on 4-23, -1.37% on 4-22, +0.95% on 4-21, -0.02% on 4-20, -0.93% on 4-17, -0.89% on 4-16, -0.03% on 4-15, +0.23% on 4-14, -0.88% on 4-13, +0.18% on 4-9, -1.21% on 4-8, -0.96% on 4-7) of the Wave 2 Intermediate Term Downcycle since 3-26-09 for the XAU (very early April for GDX/HUI), see the XAU at http://stockcharts.com/charts/gallery.html?%24xau. For GDX/HUI, see GDX's daily chart.
The GDX/HUI/XAU Wave 1 Intermediate Term Upcycle since late October 2008 peaked on 3-26-09 for the XAU, and, peaked in very early April for GDX/HUI, see the XAU at http://stockcharts.com/charts/gallery.html?%24xau. For GDX/HUI, see their daily chart.
GDX (Gold Miners ETF, http://stockcharts.com/charts/gallery.html?gdx) has downside gaps at 33.11 (filled), 29.67, 29.13, 25.41, and 23.23. GDX has very bearish breakaway upside gaps at 34.87 and 34.37, and, NEM has one at 43.89 and one at 41.68. NEM has downside gaps at 36.66 (filled 3-17) and TBD, and, has a downside bullish breakaway gap at 40.14 (filled) from 3-19's open.
Gold hit a 5% major buy signal 13 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.
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
If SPX (S & P 500) fills downside gaps at 855.16 and 825.16 next week, then, one can say that SPX (S & P 500) very likely peaked early yesterday 4-30-09 at 888.60, putting in a likely countertrend Wave B Monthly cycle high (cycle since 3-6-09) in dramatic rollover mode (upcycle running out of gas) versus the cycle high at 875.63 on 4-17-09.
SPX (S & P 500) rose only +1.48% from the cycle high at 875.63 on 4-17-09 to yesterday 4-30-09's potentially important cycle high at 888.60, see http://stockcharts.com/charts/gallery.html?%24spx, with all of the upside occurring in the prior two sessions. Sometimes, what appears to be countertrend Wave B action ends up being rollover action. Market timing obviously isn't an exact science, but, it's definitely a science.
Follow my live updates (the "play by play") at Twitter!, at http://twitter.com/tradethecycles. Highly recommended. I'm having fun and networking, in addition to microblogging my Trade the Cycles work/system and opining about a variety of subjects. I'm tradethecycles at Twitter. Joining is easy, then you follow me by clicking follow. Or, you can simply follow my Twitter web site at http://twitter.com/tradethecycles.
One of today's Tweets: "If the market peaked yesterday, then long trades will increasingly fail by larger percentages over time. Trade in same direction as market."
SPX (S & P 500) did (assuming that SPX peaked yesterday) a Wave 1 down move from early yesterday to early today, see http://finance.yahoo.com/q/ta?s=^GSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, followed by a countertrend Wave 2 up move to 880.48, however, from looking at the one day chart, see http://finance.yahoo.com/q/ta?s=^GSPC&t=1d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=, it looks like the Wave 2 up move might peak in rollover mode very early on Monday and take out today's cycle high at 880.48, which should be a great opportunity to trade short.
Nothing discussed on this Blog is a recommendation, or, should be construed as investment advice.
The broad market Walmart (WMT) Lead Indicator closed at a very bearish -1.23% versus the S & P 500 (SPX) today/on 5-1-09.
The very bordering on extremely bullish five day intraday broad market Walmart (WMT) Lead Indicator at session's end today 5-1-09, 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, jives with (probably brief) early strength on Monday, followed by likely severe weakness.
SPX (S & P 500) experienced a sharp +2.75% rise in complacency/-2.75% decline in the wall of worry today 5-1, since SPX (S & P 500) rose +0.54% versus the SPX Volatility Index VIX falling -3.29%, which points to likely significant/potentially severe SPX (S & P 500)/market weakness early on Monday 5-4-09, after likely strength very early on.
The S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) did two very large rollover upcycles since 3-30-09. The one from 3-30-09 until 4-17-09's cycle high at 875.63, and, the one from 4-21-09 until yesterday 4-30's cycle high at 888.60, note the Elliott Wave 12345 up down up down up pattern since 4-21-09.
The DJUSFN put in a countertrend Wave 2 up cycle high yesterday 4-30, see http://stockcharts.com/charts/gallery.html?%24djusfn.
The Dow Jones U.S. Financials Index (DJUSFN) put in a bearish triple top in the week ending 4-17-09, see http://stockcharts.com/charts/gallery.html?%24djusfn, so, the DJUSFN countertrend Wave B Monthly Upcycle since 3-6-09 has probably peaked.
The longer an upcycle takes to peak, and, the larger it's flat topping area is, the larger the ensuing downcycle tends to be, simply because it's usually a larger, longer, more important upcycle. A prime example right now is the DJUSFN (Financials), see http://stockcharts.com/charts/gallery.html?%24djusfn.
Watch the S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) downside gap at 855.16 (from 4-29's open, then 825.16 and 811.08) the next few days.
The savvy non contrarian S & P 500 (SPX) Commercial Traders traded significantly net short, adding 7241 long futures contracts and 16,096 short futures contracts in the five day period ending 4-21-09, see 2/3 of the way down at http://www.cftc.gov/dea/futures/deacmelf.htm, which jives with an important SPX (S & P 500) countertrend Wave B monthly cycle high occurring this week/yesterday in rollover mode.
In the latest report dated 4-28-09, the savvy non contrarian S & P 500 (SPX) Commercial Traders traded modestly net short, see 2/3 of the way down at http://www.cftc.gov/dea/futures/deacmelf.htm, engaging in only a modest degree of short covering (covered 3035 short futures contracts), despite the substantial strength that occurred during the five day period the data covers, which reveals a high level of confidence in the bearish peaking scenario. Also, they engaged in a relatively modest amount of long liquidation (liquidated 5568 long futures contracts), so, they were also in tune with the short term strength that occurred.
The savvy non contrarian S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) Commercial Traders correctly anticipated recent strength, but, they are also anticipating a sharp decline soon.
This week's/yesterday's S & P 500 (SPX, http://stockcharts.com/charts/gallery.html?%24spx) cycle high will probably be the end of the countertrend Wave B Monthly Upcycle (Wave B up of the Intermediate Term Downcycle since 1-6-09) since 3-6-09, see the five day intraday candlestick chart at http://finance.yahoo.com/q/ta?s=^spx&t=5d&l=off&z=l&q=c&p=&a=p12%2Cfs%2Cw14&c=.
I'm long FAZ (3x Finance Bear ETF) overnight, purchased on 4-22 at 8.85.
One way to check for a possible market surprise, on a day like today was, or for whatever timeframe one's trading, is to check the S & P 500 (SPX) wall of worry, by comparing SPX to the SPX Volatility Index VIX , see today's comparison at http://finance.yahoo.com/q/ta?s=^GSPC&t=1d&l=off&z=l&q=c&p=&a=fs,p12,fs,w14&c=^vix. VIX works similarly to a lead indicator.
What one needs to do is to compare SPX to VIX, by simply adding them, as I do every day on this Blog after the close. A significant/substantially positive number points to strength (significant/substantial rise in fear) and a significant/substantially negative number points to weakness (significant/substantial rise in complacency), BUT, ANY indicator/tool is secondary to cycles, Elliott Wave patterns, and, gaps.
For an unusually large number, as regular readers know, greater than or equal to + or - 6%, only for a SINGLE SESSION, an unusually large rise in fear points to significant/potentially severe weakness in the next session (maybe the same session if it occurs early enough), and, an unusually large rise in complacency points to significant/potentially substantial strength in the next session (maybe the same session if it occurs early enough).
The collapse in the S & P 500 wall of worry (SPX versus VIX) recently, see http://finance.yahoo.com/q/ta?s=^GSPC&t=3m&l=off&z=l&q=c&p=&a=p12,p12,fs,p12,fs,w14&c=^vix, points to a collapse in SPX soon. Note that when VIX substantially outperforms SPX for a while, substantial SPX strength tends to occur shortly thereafter (since 3-6-09 in this case), and, vice versa.
The broad market Walmart (WMT) Lead Indicator is super bearish since 3-6-09 (countertrend Wave B Monthly Upcycle began), at -1.23% versus the S & P 500 today/on 5-1, +0.00% on 4-30, +1.92% on 4-29, +0.19% on 4-28, +2.35% on 4-27, -3.71% on 4-24, -1.19% on 4-23, -0.98% on 4-22, -0.99% on 4-21, +2.43% on 4-20, -1.64% on 4-17, -2.54% on 4-16, -0.92% on 4-15, +1.21% on 4-14, +1.47% on 4-13, -7.52% on 4-9, -0.76% on 4-8, +0.44% on 4-7, +0.14% on 4-6, -0.67% on 4-3, -1.32% on 4-2, -0.28% on 4-1, -0.65% 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 XOM (Exxon Mobil) Lead Indicator was a very bearish -1.30% versus the XOI today/on 5-1, -0.45% on 4-30, -0.35% on 4-29, +0.92% on 4-28, +1.44% on 4-27, -1.72% on 4-24, -1.57% on 4-23, -0.98% on 4-22, -0.23% on 4-21, +2.60% on 4-20, -1.00% on 4-17, -1.62% on 4-16, +0.95% on 4-15, +0.96% on 4-14, -1.90% on 4-13, -0.66% on 4-9, -0.47% on 4-8, +0.61% on 4-7, +1.71% on 4-6, -0.57% on 4-3, -2.70% on 4-2, -0.27% on 4-1, -1.04% on 3-31, +1.96% on 3-30, +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.
Note that reliable broad market Lead Indicator Walmart (WMT) put in a countertrend Wave B Minor Intermediate Term Cycle High in very early April, see http://stockcharts.com/charts/gallery.html?wmt.
The S & P 500 (SPX) countertrend Wave B Monthly Upcycle since 3-6-09 Elliott Wave count is: A Wave 1 cycle high/red spike occurred on 3-9, a Wave 3 cycle high/red spike occurred on 3-16, then, a deceptive huge Wave 5 Elliott Wave up down up down up rollover upcycle began on 3-17-09, which probably peaked yesterday 4-30-09, see http://finance.yahoo.com/q/ta?s=^GSPC&t=5d&l=off&z=l&q=c&p=&a=p12,fs,w14&c=.
SPX's (S & P 500) countertrend Wave B Monthly Upcycle, that began on 3-6-09, is/was Wave B up of the Intermediate Term Downcycle since 1-6-09, see http://stockcharts.com/charts/gallery.html?%24spx.
WMT has bearish breakaway upside gaps at 51.53, 52.61, 53.43, 53.80 and 55.54, and, has a downside gap at 48.47.
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 (filled 4-2-09), 832.86 (filled 4-2-09), has upside gaps at 835.48 (filled), 842.50 (filled), 858.73 (filled), 869.89 (filled), 869.60 (filled), and 934.70, see http://stockcharts.com/charts/gallery.html?%24spx.
SPX (S & P 500) has downside gaps at 851.92 (filled), 855.16, 825.16, 811.08, 768.54, and, one at 676.53.
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.
FAZ (3x Finance Bear ETF) is a great opportunity to probably make a lot of money now (probably for the next few weeks/months), which is why so many are trading it. Not a recommendation.
Follow my live updates at Twitter!, at http://twitter.com/tradethecycles. Highly recommended. I'm having fun and networking, in addition to microblogging my Trade the Cycles work/system and opining about a variety of subjects. I'm tradethecycles at Twitter. Joining is easy, then you follow me by clicking follow after doing a search for tradethecycles. Or, you can simply follow my Twitter web site at http://twitter.com/tradethecycles. I just started using Twitter recently. I'm going to try to make timely live updates at Twitter and make it a real time extension of this Blog. Also, I opine about other subjects.
GDX/HUI/XAU's short term countertrend Wave B upcycle since 4-17-09 appears to have peaked on 4-24-09, see the XAU at http://stockcharts.com/charts/gallery.html?%24xau. For GDX/HUI, see GDX's daily chart. The weakness since 4-24-09 is probably Wave C down of the Wave 2 Intermediate Term Downcycle since 3-26-09 for the XAU (very early April for GDX/HUI).
The five day intraday NEM Lead Indicator closed at extremely bearish, see http://finance.yahoo.com/q/ta?t=5d&s=NEM&l=off&z=l&q=c&a=m26-12-9&a=p12&a=fs&a=w14&c=^xau, which is a very short term bullish indication.
GDX/HUI/XAU are probably doing Wave C down since 4-24-09 (the NEM Lead Indicator closed at -4.10% versus the XAU today/on 5-1, +1.00% on 4-30, -1.03% on 4-29, -0.56% on 4-28, +2.63% on 4-27, +1.22% on 4-24, -1.75% on 4-23, -1.37% on 4-22, +0.95% on 4-21, -0.02% on 4-20, -0.93% on 4-17, -0.89% on 4-16, -0.03% on 4-15, +0.23% on 4-14, -0.88% on 4-13, +0.18% on 4-9, -1.21% on 4-8, -0.96% on 4-7) of the Wave 2 Intermediate Term Downcycle since 3-26-09 for the XAU (very early April for GDX/HUI), see the XAU at http://stockcharts.com/charts/gallery.html?%24xau. For GDX/HUI, see GDX's daily chart.
The GDX/HUI/XAU Wave 1 Intermediate Term Upcycle since late October 2008 peaked on 3-26-09 for the XAU, and, peaked in very early April for GDX/HUI, see the XAU at http://stockcharts.com/charts/gallery.html?%24xau. For GDX/HUI, see their daily chart.
GDX (Gold Miners ETF, http://stockcharts.com/charts/gallery.html?gdx) has downside gaps at 33.11 (filled), 29.67, 29.13, 25.41, and 23.23. GDX has very bearish breakaway upside gaps at 34.87 and 34.37, and, NEM has one at 43.89 and one at 41.68. NEM has downside gaps at 36.66 (filled 3-17) and TBD, and, has a downside bullish breakaway gap at 40.14 (filled) from 3-19's open.
Gold hit a 5% major buy signal 13 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.
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
Labels: DUG, GDX, Gold, Gold Stocks, HUI, NDX, NEM, RUT, Silver, Silver Stocks, SPX, SRS, TAN, XAU, XOI, XOM
posted by Joe Ferrazzano at
2:16 PM
4 Comments:
Joe,
Have you given though to the inverse head and shoulders forming on the DOW? Check out this link -- http://grandich.agoracom.com/2009/05/friday-afternoon-thoughts/
Do you have any thoughts?
Thanks
Vickky
By
Unknown, at 9:27 PM
Hi Vicky,
My work indicates that this upcycle since March 6 for the S & P 500/early March for all major averages is a countertrend Wave B up of the intermediate term downcycle since 1-6-09. Good luck.
By
Joe Ferrazzano, at 9:42 PM
Joe, I suspect if the xlf cracks the intraday high of 11.33 that the big financials probably run another 10%.
Looks more and more to me like that gap at 934 and change will probably fill in the next two days pre stress test data.
I think I am gonna bail on faz if 11.33 falls.
By
CRS, at 11:24 AM
Joe, in your blog tonight, I am curious where you think this is headed? 934? 1000? Those two seem the most likely just looking at the 6 month charts. Nasdaq ran roughly 50% in 2001 in a bear before breaking back down. 50% on the s&p would be 999. Did it in about 2 and 3/4 months. We are about right at 2 months. Did you dump your FAZ today?
By
CRS, at 1:31 PM
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