Joe F. Rocks!
Growth Stock Investor & Market Strategist

Joe F. Rocks! Trade the Cycles Updated 9-25-05

Growth Stock (NASDAQ) Timeliness - Monday - Timely but Risky due to the decline of the wall of worry on 9-23 and the fact that NDX closed near the top of it's short term upcycle channel on 9-23 (Strength/an uptrend, that could follow a gap down at the open and early weakness, during "much" of Monday's session is a "hit!.")
                                                           - Short Term Cycle (2-3 Days) - Timely but Risky (NDX/QQQ are in short term upcycles as of 9-23-05.)
                                                           - Minor Intermediate Term Cycle (3-6 Weeks) - Untimely (NDX minor intermediate term downcycle is in place as of 9-23-05 and the major upcycle trendline broke down.)

Brief Cycles Summary (Analysis/Commentary follows)

NASDAQ 100 Very Long Term Downcycle/Secular Bear Market = Down since March 24, 2000 Bull Market peak/very long term cycle high at 4816.35.

NASDAQ 100 Long Term Cycle = Up since long term cycle low at 1301.93 on 8-13-04.

S & P 500 Very Long Term Downcycle/Secular Bear Market = Down since March 24, 2000 Bull Market peak/very long term cycle high at 1552.87.

S & P 500 Long Term Cycle = Up since 8-13-04 long term cycle low at 1060.72. SPX is working it's way up to the very long term downcycle trendline.

XAU (Philadelphia Gold/Silver Index) Very Long Term Upcycle/Secular Bull Market = Began October 25, 2000 at 41.61 Bear Market/very long term cycle low.

XAU (Philadelphia Gold/Silver Index) Long Term Cycle (heading up) = Began May 10, 2004 at 76.79 long term cycle low. Long term cycle high occurred at 113.41 on 1-6-04.

HUI (AMEX Gold Bugs Index) Very Long Term Upcycle/Secular Bull Market = Began on November 15, 2000 at 35.31 Bear Market/very long term cycle low. 

HUI (AMEX Gold Bugs Index) Long Term Cycle (heading up) = Began May 10, 2004 at 163.81 long term cycle low. Long term cycle high occurred at 258.60 on 12-2-03.

Please see Cycles Summary for the details of the cycles that are the basis for my market timing system.

For those of you who entered this page directly and haven't discovered the vast resources on the home page yet please check out Joe F. Rocks! Growth Stock Investor & Market Strategist, don't forget to bookmark it and please tell your colleagues and friends.

Analysis/Commentary -

The NASDAQ Composite (COMPX) opened modestly lower on Friday 9-23, but, COMPX trended higher much of the session, spent much of the session in positive territory, and closed significantly higher at 2116.84, +6.06 (+0.29%).

The long term downcycle trendlines for NDX (NASDAQ 100) and SPX (S & P 500) were broken during the week ending 11-5-04, so (unexciting because of the very long term downcycle since March 2000) long term cycle buy signals occurred. Long term cycle lows occurred at 1301.93 on 8-13-04 for NDX and at 1060.72 for SPX. NDX and SPX both remain in very long term downcycles since March 2000 (see SPX chart dated 11-16-04).

"Eerie Nikkei-SPX Parallels" (At Zeal) shows the high degree of correlation between the S & P 500's and NASDAQ's post bubble behavior and that of the Japanese stock market that experienced a bubble in 1989 and remains at much lower levels 15 years later.

As one can see in the NDX (NASDAQ 100) charts below, a long term (1 to 3 years) cycle high occurred on 1-20-04 at 1559.47 and a long term cycle low occurred at 1301.93 on 8-13-04. The collapse of the wall of worry from late November 2003 until late January 2004 and the dramatic trend change in NASDAQ Institutional Money Flow 101 weeks ago to negative/outflows correctly portended a trend change. Given last week's positive NASDAQ Institutional Money Flow, strength is indicated this week, but cycle channels/trendlines are the primary market timing consideration. A minor intermediate term downcycle is in place (see chart below), because a 2% follow through sell signal occurred.

The very long term downcycle (3-10+ years in duration) which began in March 2000 probably has about 13 years to go. Paper assets (and hard assets in reverse fashion) tend to have very long term cycles that last about 35 years with about 17.5 years up (1982-2000) and 17.5 years down (2000-2018ish). There were very long term cycle highs (paper asset bubbles) in 1897, 1929, 1965ish, and in 2000 (about 35 years apart on average).

Risky NDX long term cycle buy signal because of the very long term downcycle since March 2000 and outflows nearly every week the past 101 weeks (see chart below). A major intermediate term cycle buy signal is in effect for NDX and SPX, but it appears to have broken down for NDX (see chart below). 5% follow through is required for a major sell signal. A minor intermediate term downcycle is in place for NDX and SPX because 2% follow through sell signals occurred.

NASDAQ Institutional Money Flow (block trading data, 10,000+ share blocks) "portends" (this isn't a good one week look ahead indicator except when there's a well established multiweek trend and the minor intermediate term cycle agrees with it) strength this week ending 9-30 (a minor intermediate term downcycle is in place as of 9-23-05, which is the most important consideration) with 1.46% (309) more uptick blocks during the week ending 9-23. This primary fundamental indicator has reliably predicted the NASDAQ's direction, having turned positive in March 2003 after being negative for about three years following the March 2000 bubble peak/very long term cycle high. NASDAQ Institutional Money Flow turned negative again 101 weeks ago however and has generally been substantially negative, which resulted in a sharp decline until 8-13-04's long term cycle low.

Breadth, a primary fundamental indicator, was positive on Friday 9-23 with NASDAQ A/D at nearly 18:11 in favor of advancing issues and NASDAQ Up/Down Volume was in favor of up volume by nearly 3:2.

The NASDAQ wall of worry (VXN (NASDAQ 100 Volatility Index) and QQV (QQQ Volatility Index)) shrank on Friday 9-23 with VXN revealing that a significant (0.50-1.99%) rise in complacency occurred for NDX (NASDAQ 100) and QQV revealed that a significant rise in complacency occurred for QQQQ (NASDAQ 100 Tracking Stock). The NASDAQ is deemed Timely but Risky on Monday despite the short term upcycle due to the fact that NDX is near the top of it's short term upcycle channel at Friday 9-23's close, a minor intermediate term downcycle may still be in place, and the fact that NDX and QQQQ experienced a significant rise in complacency on 9-23. A short term upcycle is in place at Friday 9-23's close that usually would lead to strength/an uptrend, and a minor intermediate term downcycle is/may still be in place (see the top chart in the group above), a 2% follow through sell signal occurred last week. Worse than expected economic data may result in weakness.

Williams %R for NDX is at -70.36 on 9-23-05 (below -80 (near the bottom) on my chart is the (look to) "buy" area (oversold) and above -20 is the look to "sell" area (overbought)). NDX is on a major intermediate term cycle buy signal (5% follow through after breaking it's intermediate term downcycle trendline, see the top chart above), but appears to have broken down. NDX is in a minor intermediate term downcycle, because a 2% follow through sell signal occurred (see the top chart above). MACD is on a sell signal (below it's moving average). RSI and Stochastics are on sell signals. 

A significant rise in complacency occurred for the NASDAQ 100 on Friday with VXN (NASDAQ 100 Volatility Index) falling -0.14 (-0.92%) to 15.16 while NDX (NASDAQ 100) rose +4.39 (+0.28%) to 1571.75 which reveals that a significant (0.50-1.99%) rise in complacency occurred for NDX because VXN fell significantly while NDX rose modestly (NDX wall of worry shrank) which portends weakness in NDX on Monday, but, a short term upcycle is in place at session's end on Friday 9-23. 

A significant (0.50-1.99%) (+0.28% rise in QQQQ + -1.43% decline in QQV = -1.15% which is a 1.15% rise in complacency) 1.15% rise in complacency occurred for QQQQ (NASDAQ 100 Tracking Stock, +0.11 (+0.28%) to 38.75) on Friday since QQQQ rose modestly while QQV fell significantly (QQQ Volatility Index, -0.20 (-1.43%) to 13.79) (QQQQ wall of worry shrank) which portends weakness in QQQQ on Monday, but, a short term upcycle is in place at session's end on Friday 9-23. 

On Friday VIX (which is now calculated using the implied volatility of SPX (S & P 500) options instead of OEX (S & P 100) options) fell -0.37 (-2.78%) to 12.96 versus a rise in SPX of +0.67 (+0.06%) to 1215.29 which was a sharp (2-2.99%) rise in complacency (wall of worry shrank) for the S & P 500/value stocks (SPX is about 75% value stocks) since VIX fell sharply while SPX rose slightly (S & P 500) which portends weakness in SPX on Monday, but, a short term upcycle is in place at session's end on Friday 9-23, and, a minor intermediate term downcycle is/may still be in place (2% follow through sell signal occurred). 

The S & P 500 (SPX) is deemed Timely but Risky on Monday due to the sharp rise in complacency on Friday 9-23 and the fact that a minor intermediate term downcycle may still be in effect. A short term upcycle is in place at Friday 9-23's close which usually would lead to strength/an uptrend on Monday if it remains in place. Worse than expected economic data may result in some weakness. MACD is on a sell signal (below it's moving average). Stochastics and RSI are on sell signals. Williams %R for SPX is at -73.71 on 9-23-05 (below -80 (near the bottom) on my chart is the (look to) "buy" area (oversold) and above -20 is the look to "sell" area (overbought)). SPX is on a major intermediate term cycle buy signal (5% follow through after breaking it's intermediate term downcycle trendline). SPX is in a minor intermediate term downcycle (2% follow through sell signal  occurred).

The CBOE Total Put/Call Ratio at a high (at or above 0.90 but below 1.05) level of 0.95 at Friday's close points to weakness on Monday (the CBOE Index Put/Call Ratio at an extremely high 1.87 points to weakness/volatility) because it's a reliable non-contrarian indicator of the next session's early action except at extremely high (at or above 1.05) or extremely low levels (at or below 0.50) where it sometimes is also a contrarian indicator (sometimes portends early substantial strength (below 0.50) or a sharp rally following early potentially severe weakness (at or above 1.05), judgement is involved). Please keep in mind that cycle channels/trendlines are the most important consideration when timing any market.

Looking at NASDAQ 100 (NDX) Chicago Mercantile Exchange Commitments of Traders - Futures Only (Reportable Positions as of September 20, 2005), the Speculators (hedge funds and other speculators/traders) sold an unusually large (> 10% decrease in long contracts) 1364 long futures contracts and covered an unusually large (> 10% decrease in short contracts) 5791 short futures contracts which portends strength this week (contrarian indicator) due to the unusually large net long trade which is the non contrarian case short term, whereas, the Commercial Traders sold an unusually large (> 10% decrease in long contracts) 19,585 long futures contracts and covered an unusually large (> 10% decrease in short contracts) 14,101 short futures contracts which portends strength this week (non contrarian indicator), due to the unusually large net short trade which is the contrarian case short term. NDX is in a minor intermediate term downcycle as of 9-23-05, but it may have bottomed last week (2% follow through is required for a buy signal). Cycle trendlines/channels are the primary market timing consideration. NDX COT (do an edit then find "nasdaq" in Internet Explorer or Netscape to find it because it's near the bottom)

American Association of Individual Investors (AAII) % Bullish (AAII has been a useful non-contrarian sentiment indicator at very low levels below 40% bullish and very high levels above 60% bullish.) @ 39.5% bullish last week from 51.4% the prior week is a neutral factor for the prospects of stocks during the week ending 9-30-05 because it's at a mid range level of bullishness (between 40-60%). The change in or delta AAII % bullish is also a useful short term/weekly look ahead indicator in addition to the absolute value of AAII % bullish. The very sharp decline last week is a negative factor for the prospects of stocks during the week ending 9-30-05 because it's a very sharp rise in fear for this useful non-contrarian sentiment indicator contrarian. For now I'm using delta AAII % Bullish as a non contrarian indicator and I haven't determined exactly what significant changes are versus sharp or very sharp, etc. Since it appears to be strictly non contrarian (so far), I don't have to determine what an unusually large change is where the indicator becomes contrarian. The absolute value does become contrarian at extremely low (0-30% bullish) or extremely high (70-100% bullish) values, at least from an intermediate term cycle standpoint (a few weeks/months).

Gold & Silver Stocks - HUI, NEM, XAU Hit Monthly Cycle Highs On September 19  
 

• It was a great party for three weeks but the hangover/monthly downcycle began on Monday 9-19 following monthly cycle highs at 246.84 for HUI, at 47.25 for NEM , and at 113.26 for the XAU (versus long term cycle high at 113.41 on 1-6-04). The good news is that monthly cycle lows will probably occur this week, and, keep in mind that the major upcycle that began on 5-16-05 (see latest charts) has gone parabolic/increased in strength.        

• "Trade the Cycles" synopsis - HUI, NEM, and the XAU hit minor intermediate term cycle lows (one to two month cycle lows) on Tuesday August 30 (see latest charts). Minor intermediate term cycle highs occurred on Monday 9-19 because 2% follow through monthly cycle sell signals occurred last week (see latest charts). A substantial decline is likely this week until monthly cycle lows occur. The monthly cycle low targets are, based on the approximated more sharply rising major upcycle channel segments (see latest charts), 215-225 for HUI, 42-44 for NEM, and 102-105 for the XAU. This implies downside of about 5-10% this week for HUI, NEM, and the XAU, and more if the channel segments end up being flatter than drawn. The monthly cycle lows are likely to occur early to mid week because the sharply declining/parabolic part of the monthly downcycle appears imminent. So, a good buying opportunity should occur this week. Williams %R for HUI, NEM, and the XAU, currently near an overbought level (at or above -20, see latest charts), is likely to become oversold (below -80) when the monthly cycle lows occur, so watch that indicator as well as the target ranges of course. A more risk averse way to buy, as opposed to trying to pick the bottom, is to wait for short term cycle lows following monthly cycle lows, which would probably be the same as waiting for 2% follow through monthly cycle buy signals. The fact that NEM underperformed the XAU by a significant margin of -0.29% on Friday 9-23 points to likely weakness in HUI and the XAU (probably early) on Monday 9-26, as does the fact that XAU Implied Volatility revealed a sharp (2-2.99%) 2.47% rise in complacency on 9-23 (-1.53% decline in XAU Implied Volatility + -0.94% decline in the XAU on 9-23 = -2.47%. The XAU wall of worry shrank by 2.47% on 9-23, therefore complacency rose by 2.47%) that portends weakness/a downtrend on Monday 9-26. Sustained sideways action often occurs for a few hours/days following cycle highs/lows (the flat part of a cycle's curve), so look for that. Following short term cycle lows (Wave 4 cycle lows) late on Tuesday 9-13 Elliot Wave 5 was in progress with a vengeance until 9-19 for the monthly cycle that began 8-30-05. Elliot Wave Theory (see NEM chart dated 8-12-05 and the XAU chart dated 5-16-05) complements cycle channels/trendlines nicely (as do gaps), but is a secondary market timing tool, because cycle channels/trendlines are the primary market timing consideration. It's likely that HUI, NEM, and the XAU will experience substantial declines this week, and, should fill some downside gaps (created in recent weeks at 44.99, 43.94, 41.74, 41, and 40.47 for NEM, and, at 106.46, 100.68, 100.04 and 98.36 for the XAU. The historical data indicated that HUI had no gaps), since nearly all gaps that can reasonably be filled are getting filled. Gold hit a 2% follow through minor intermediate term cycle buy signal four weeks ago (see 1 year chart), but probably broke down last week. The most important market timing consideration, therefore the most important thing to remember, is that HUI, NEM, and the XAU are in the sharply rising phase of the long term upcycle (began on May 10, 2004) since May 16, 2005's major intermediate term cycle lows (see  latest charts), and, this major upcycle should last until about May 2006 based on the fact that the long term cycles have been getting progessively longer (see first chart below and the HUI chart dated 5-12-05). HUI, NEM, and the XAU have been in a true Bull Market/very long term upcycle since October (NEM/XAU)/November (HUI) 2000 (see first chart below and the XAU chart dated 7-12-05). They've been in a long term upcycle since May 10, 2004 (see first chart below and the HUI chart dated August 5). They've been in a major intermediate term upcycle since May 16, 2005 (see latest charts). Gold began a very long term upcycle/true Bull Market in April 2001 and silver did so in late 2001.
  

• NEM experienced a major breakout recently, shattering it's downtrendline since 11-17-04 (see chart dated 9-16-05) and HUI, NEM, and the XAU all clearly broke out of their prior major upcycle channels since 5-16-05 (see latest charts) in a big way, so the new more sharply rising major upcycle channel/trendline segments for HUI, NEM, and the XAU have to be approximated based on where the monthly cycle highs occurred (see latest charts), until enough cycle lows occur such that the new major upcycle channel/trendline segments are clearly defined. Normally of course when drawing an upcycle's channel the bottom line is drawn first, which is also the upcycle's rising bottoms uptrend line. The major intermediate term upcycle channels/trendlines for HUI, NEM, and the XAU have "gone parabolic" and increased in strength. This behavior is what one would expect in the sharply rise phase (began 5-16-05) of the long term upcycle (began 5-10-04). The surprises will tend to be to the upside until this major upcycle breaks down.
  

• The US Dollar only determines 1.00% (-10% times -10% = 1.00%) of gold's price action/variability now since the USD's negative correlation coefficient with gold is -10% as of 9-23-05. The USD determines only 1.96% of silver's price action/variability since the USD's negative correlation coefficient with silver is -14% on 9-23-05. The correlation coefficient, r, provides the direction of the correlation (+ or  -) but only the square root of the strength of the correlation. The coefficient of determination, r², provides the true strength of the correlation but without indicating its direction. Both of them must be used to fully understand the entire picture regarding correlation's effect. For the time being the US Dollar is only a very minor factor for precious metals.

• 2% follow through buy signals occurred four weeks ago for HUI, NEM, and the XAU, which correctly indicated that minor intermediate term cycle lows (one to two month cycle lows) occurred on Tuesday August 30 at 198.78 for HUI, at 38.40 for NEM, and at 92.68 for the XAU. 2% follow through sell signals occurred last week as discussed previously, correctly indicating that minor intermediate term cycle highs (one to two month cycle highs) occurred on Monday 9-19 at 246.84 for HUI, at 47.25 for NEM , and at 113.26 for the XAU. Gold also hit a 2% follow through buy signal four weeks ago (see latest chart), but appears to have broken down last week.

• The gold COT (Commitments of Traders) data clearly points to weakness being the tone for most of this week, which jives with minor intermediate term cycle highs occurring on 9-19-05 for HUI, NEM, and the XAU. The gold Commercial Traders added (data as of 9-20-05) a large 6522 long futures and options contracts (added 8291, 157, 3371 the prior three weeks, sold 243 the prior week, added 4653 the prior week) and added an unusually large/huge (> 10% increase in short contracts) 40,109 short futures and options contracts (added 18,612, 7588 the prior two weeks, covered 45,886, 281 the prior two weeks) which portends weakness this week (non contrarian indicator), due to the huge short trade that causes the unusually large case to revert back to non contrarian, but the large long trade points to some strength. The most important consideration in timing any market is the cycle channels/trendlines (see chart above) and keep in mind that the data is as of 9-20-05, so the data is somewhat stale (for short term cycle trading) by the time it's analyzed, but is highly useful nonetheless, especially for intermediate term cycle trading (a few weeks/months). Gold hit a minor intermediate term cycle low four weeks ago. The non contrarian gold Commercial Traders correctly engaged in massive short covering four weeks ago (45,886 short futures and options contracts covered, data as of 8-30-05) and made a respectable long trade of 3371 futures and options contracts, while the gold Speculators blundered as usual and sold a massive 45,185 long futures and options contracts near the minor intermediate term cycle low (data as of 8-30-05).
  

• The silver COT data clearly points to weakness being the tone for most of this week, which jives with likely minor intermediate term cycle highs occurring early this week for HUI, NEM, and the XAU. The silver Commercial Traders sold an unusually large (> 10% decrease in long contracts) 4811 long futures and options contracts (added 1064 the prior week, sold 1426 the prior week, added 5451 the prior week) and added an unusually large/huge (> 10% increase in short contracts) 15,066 short futures and options contracts (added 801, 2112 the prior two weeks, covered 10,282, 4610, 4503, 2360 the prior four weeks) which portends weakness this week (non contrarian indicator), due to the huge short trade that causes the unusually large case to revert back to non contrarian. The most important consideration in timing any market is the cycle channels/trendlines. The silver Commercial Traders made an unusually large long trade and engaged in an unusually large degree of short covering four weeks ago, which was a great sign (correct indication) on an intermediate term cycle basis (weeks/months).
  

• The remainder of the charts can be found at the bottom.
  

• Williams %R is near overbought territory (at or above -20) for HUI (-27.00)/NEM (-23.00)/XAU (-25.20) on 9-23-05 (see latest charts). Since it hit an extremely overbought level (at 0) last Monday 9-19 (and the prior week), that correctly was a reliable indication to look to sell (minor intermediate term cycle traders only), which doesn't mean you mechanically sell, but that you probably will sell very soon or you may start selling (in 2 or 3 stages). The converse is of course true for oversold levels at or below -80, but the most important consideration by far is cycle channels/trendlines. Indicators and timing tools are used for finetuning buy/sell decisions after cycle trendline buy/sell signals suggest it's time to buy/sell (see charts above, most of you should probably be holding until a long term cycle sell signal occurs in 6 to 12 months).

• The XAU Put/Call Ratio, at 1.01771 (October expiration) on 9-23 versus at 0.72165 (October expiration) on 9-16, is a dramatic rise in fear that points to near term substantial XAU strength following minor intermediate term/monthly cycle lows, because the XAU Put/Call Ratio rose much more in percentage terms than the XAU fell last week. It's also an unusually large rise in fear that correctly portended weakness last week and portends weakness this week until monthly cycle lows occur.
  

• An important bullish development is that gold's major intermediate term upcycle trendline since early February has turned up/increased in strength (see 1 year chart above). Gold hit a 2% follow through minor intermediate term cycle buy signal recently (see 1 year chart above), but appears to have broken down last week.
  

• The USD should remain below 89.50, which is where the likely major intermediate term downcycle trendline is (see 1 year chart above). The USD appears to have put in a major intermediate term cycle high, because it's parabolic uptrendline has broken down (see 1 year chart above). A 5% follow through sell signal is required to confirm that's the case, but given that the USD has lower volatility than most markets, probably 3% follow through makes sense for major buy/sell signals. The dramatic spike also suggests that a major cycle high may have occurred.
  

• Many of the bullets that follow haven't changed from last week because this is a system ("Trade the Cycles") and because some are reading this for the first time. Some bullets are needed for reference purposes or to revisit important developments in the precious metals sector. "Trade the Cycles" is a relatively new system (began in 2003) that only reached a well developed state this year. Major buy/sell signal requirements were improved this year.
  

• When an upcycle's parabolic trendline, or "parabola" as I like to call it, breaks down, substantial declines almost always occur (see first chart and the USD chart). Once a cycle dramatically rolls over (rate of ascent declines dramatically), it's usually time to take profits if you're trading that cycle timeframe. Risk skyrockets following parabolic trendline sell signals as discussed in previous updates. Sideways action is a sign that a cycle high or low has occurred or is imminent. The best time to buy or sell is usually during sideways action after a cycle's "parabola" has broken down (or is broken to the upside). Almost all cycles have parabolic shaped trendlines, but, during the final spike move (or plunge/inverse spike for downcycles) some judgement is required as to what the parabolic or nearly vertical trendline is, which is the final segment of the "parabola."
  

• You must chart the cycles for the stocks you trade/invest in, because they can be radically different than those of HUI, NEM, and the XAU. For example, CDE and SIL just hit long term cycle lows in May 2005 versus HUI, NEM, and the XAU doing so on May 10, 2004.
  

• It can take a while for a major upcycle's trendline to establish itself. HUI is more volatile and therefore tends to have more uncertainty than NEM and the XAU. This is one of the good reasons to look at three major upcycles (HUI, NEM, and the XAU) rather than one. Also, NEM, being a reliable lead indicator and the largest market cap component of HUI and the XAU, has the most important cycles. The long term upcycle's (since May 10, 2004) rising bottoms trendline didn't exist until May 16, 2005's major intermediate term cycle lows (HUI, NEM, and the XAU. See first chart above and the HUI chart dated August 5). It took slightly over a year to establish itself and ended up being very flat, probably because the long term cycle lows occurred well above the very long term upcycle trendline (see top chart above). The very important point I'm trying to make is to understand that markets do reliably experience cycles (look at the charts above) even though it can take a while for a cycle's trendline to clearly establish itself, which can lead to surprises with shorter cycles.

• The major intermediate term upcycle trendlines since May 16, 2005 for HUI, NEM, and the XAU (see charts above, gold since early February, see it's 1 year chart) should become more parabolic/sharply rising over time (clearly did recently), as cycles almost always do, and given that this should be the sharply rising phase of the long term upcycle (began on 5-10-04), dramatic gains should occur. HUI, NEM, and the XAU should approximately double from their major intermediate term cycle lows on 5-16-05 to their long term cycle highs as discussed in previous updates. This major intermediate term upcycle should last about twice as long as last year's (6 months from 5-10-04 until 11-17-04) and see about twice the gains (100% or so versus HUI's 51.50% from 5-10-04 until 11-17-04). Note in HUI's 5 year chart dated 6-29-05 (top chart above) that the long term cycles are getting longer. The previous long term upcycle's parabolic phase lasted about 9 months, so it's reasonable to assume that this one will last about one year (until May 2006).
  

• I update my gold/silver stock "Current Assessment" near the top of my home page (middle of the second bullet) regularly, so near critical times especially, you may want to check it out. Also, you can see how I use the indicators in concert with cycles just above the "Current Assessment." Fascinating!
  

• Gold put in a major bottom near $410 in early February, so it led the stocks pricewise but didn't flash a major buy signal until June (see 1 year chart below), a few weeks after HUI, NEM, and the XAU did (see HUI chart dated 6-3-05). So, "major cycle effect wise" gold still lagged gold stocks even though pricewise it bottomed earlier, which is the first time I've seen gold lead gold stocks pricewise. Gold stocks still led gold in that they flashed a major intermediate term cycle buy signal a few weeks before gold did.
  

• If you're trading cycles you should sell whenever a parabolic trendline breaks down for whatever cycle timeframes you're trading (trade parabolas basically, see the first chart and other charts above, that have an ever increasing rate of ascent for upcycles or an ever increasing rate of descent for downcycles, use 2% follow through for minor buy/sell signals and 5% plus the NEM Lead Indicator for major buy/sell signals as previously discussed).
  

• Most of you should not be trading minor intermediate term cycles, but should be holding for the next approximately 6 to 9 months (the HUI 5 year charts dated 6-29-05 and 5-12-05 above shows that the long term cycles are getting longer), during which dramatic gains should occur for HUI, NEM, and the XAU because this is, according to the nature of cycles, the parabolic/sharply rising phase of the long term upcycle that began on May 10, 2004. HUI, NEM, and the XAU were very flat during the early phase of their long term upcycles, which isn't too surprising since cycles tend to begin relatively flat and become increasingly parabolic/sharply rising over time.
  

• The XAU 2 year chart dated 5-16-05 above shows the Elliot Wavesque 1, 2, 3, 4, 5 cycle structure of the major intermediate term upcycle from 5-10-04 until 11-17-04 as well as the A, B, C correction from 11-17-04 until 5-16-05. The fact that there are predictable cyclical patterns for gold/silver stocks and most if not all markets is well established. The major caveat being that one must know what the longer cycles are doing in order to time shorter cycle timeframes. The predictability of the long term cycles uptrend obviously comes from the very long term upcycle since late 2000 and knowing that very long term upcycles (and downcycles) tend to last about 17.2 years. Gold's very long term downcycle lasted 21 years, from 1980 until April 2001.
  

• Gold hit a major intermediate term cycle buy signal (see 1 year chart above) in June because it followed through by more than 5% after breaking it's intermediate term downcycle trendline in place since early December 2004. This major buy signal lagged gold stocks' major buy signal by a few weeks, but this is the first time that I've seen gold hit a major bottom (early February 2005) well before gold stocks did (May 16, 2005) in this very long term upcycle since late 2000 for gold/silver stocks and since April 2001 for gold (late 2001 for silver), which is probably a major positive. Gold usually lags gold stocks at major cycle highs/lows. Gold peaked in early December 2004 versus HUI, NEM, and the XAU doing so on 11-17-04 and gold peaked in early April 2004 versus HUI and NEM doing so on 12-2-03 and the XAU doing so on 1-6-04 (long term cycle highs).
  

• Most of you will do much better holding for the next 6 to 9 months as opposed to actively trading, at which time long term cycle highs should occur for HUI, NEM, and the XAU that may be about double the level of the major lows on 5-16-05. HUI may rise on the order of 100% to about 330 in the next 6-9 months assuming a long term upcycle is in effect. NEM may rise to the 70-75 area in the next 6-9 months in that case. The XAU may rise to about 150 in the next 6-9 months in that case.

• Major intermediate term cycle lows occurred for HUI, NEM, and the XAU on 5-16-05 at 165.71 for HUI, at 34.90 for NEM, and at 78.23 for the XAU, that were above their long term cycle lows that occurred at 163.81 for HUI, at 34.70 for NEM, and at 76.79 for the XAU on 5-10-04.
  

• Looking at the top chart above, the 5 year HUI chart showing the 6 long term cycle 5% follow through buy/sell signals in the gold/silver stock very long term upcycle, one sees that all 6 long term cycle buy/sell signals correctly indicated that the long term cycle high or low was in (the NEM Lead Indicator is also needed when a potential long term cycle low occurs well above the very long term upcycle trendline as discussed previously). The probability that coincidence/pure luck led to that outcome is only 1.56% which is 50% raised to the sixth power. So, assuming that a very long term upcycle remains in effect (they last about 17.2 years on average), there's a very high probability that long term cycle buy/sell signals will work in the future. I can provide countless examples for shorter cycle timeframes where the parabolic trendline buy/sell signals worked every time. The caveat is that one must know what the longer cycles are doing (where their trendlines are) or you might use the wrong trendline and get an erroneous buy/sell signal.
  

• A new potential indicator (that I haven't seen a use for yet) is Chaikin Money Flow (CMF) for reliable lead indicator Newmont Mining (NEM). Money flow is a primary fundamental indicator. NEM CMF turning negative tends to correspond closely with the beginning of sharp downcycles. Please see the NEM chart above dated 9-23-05. NEM's CMF closed at +0.28 on 9-23-05. Given that a CMF level of +0.25 for NEM reflects strongly positive CMF, then +0.28 is strongly positive CMF.
  

• The negative correlation between gold and the USD is not as high as the correlation coefficient makes it seem, since it's the square root of the strength of the correlation. The correlation coefficient is -10% on 9-23 (-26% on 9-16) for the past 180 trading days for gold, according to Moore Research Center, Inc. For silver the negative correlation coefficient with the USD is -14% on 9-23 (-9% on 9-16) for the past 180 trading days. Silver's correlation is usually much more positive than gold's because it's more of an industrial metal than gold is, hence it has a more positive correlation with US economic strength and a strong US Dollar. 

• The Coefficient of Determination is the square of the correlation coefficient (the true strength of the correlation is determined by squaring the correlation coefficient) and explains how much the USD is determining gold's and silver's price action/variability or the S & P 500 is determining gold's or silver's price action/variability. The US Dollar only determines 1.00% (-10% times -10% = 1.00%) of gold's price action/variability now since the USD's negative correlation coefficient with gold is -10% as of 9-23-05. The USD determines only 1.96% of silver's price action/variability since the USD's negative correlation coefficient with silver is -14% on 9-23-05. The correlation coefficient, r, provides the direction of the correlation (+ or  -) but only the square root of the strength of the correlation. The coefficient of determination, r², provides the true strength of the correlation but without indicating its direction. Both of them must be used to fully understand the entire picture regarding correlation's effect.

• The positive correlation coefficient between gold and the S & P 500 is +22% for the past 180 trading days (positive correlation coefficient with silver is +11%), according to Moore Research Center, Inc. This means that the S & P 500 determines 4.84% of gold's price action/variability (Coefficient of Determination = 22% squared = 4.84%). The S & P 500's sharp decline from early March until late April is a major reason why gold and gold stocks were weak during that stretch (positive correlation coefficient between gold and the S & P 500 for the past 180 trading days was at 60% 19 weeks ago).
  

• The Gold:XAU Ratio (currently at 4.23) may become a third major buy/sell signal signal criterion, along with 5% follow through and a clearly bullish/bearish NEM Lead Indicator. Per Myles Zyblock, Chief North American Institutional Strategist at RBC Capital Markets, when it's above 5.0 (12% of the time the past 22 years) the average annual one-year holding period return for stocks in the XAU has been +38.4% and in only one instance was there a loss. When it's below 3.0 (5% of the time the past 22 years) the average annual one-year holding period return for stocks in the XAU has been -24.3% with no instances of an up year. As a stand alone indicator, at least for trading purposes, the Gold:XAU Ratio probably isn't highly useful because obviously both gold and the XAU can fall 10% or more in tandem after reaching 5.0 or rise 10%+ after reaching 3.0. However, I need to research/backtest this. 5.25 or even 5.50 is probably a better criterion.
  

• The report I received via e mail from Marketocracy for the week ending 9-23-05: "JFR - Joe F. Rocks's Mutual Fund, Net Asset Value (NAV): $10.77 on 9-23 vs $11.21 on 9-16, Compliant: Yes, This past week Return: -3.95%." HUI (AMEX Gold Bugs Index) was down -1.07% last week for comparison, so JFR outperformed HUI in 16 of the past 36 weeks. HUI is a better yardstick than NEM or the XAU, since it usually outperforms NEM and the XAU (in upcycles). HUI was up about 70% each year in 2001, 2002, and 2003, so outperforming HUI is no easy task. My imaginary mutual fund JFR is up 7.70% since it's inception on 1-5-05.
  

• XAU Implied Volatility fell -1.53% to 26.080 on Friday 9-23 from 26.485 on 9-22 versus a -0.94% decline in the XAU on 9-23, which is a sharp (2-2.99%) 2.47% rise in complacency (-1.53% + -0.94% = -2.47%. The XAU wall of worry shrank by 2.47%, therefore complacency rose by 2.47%) that portends weakness/a downtrend on Monday 9-26 (complacency is usually contrarian, therefore normally portends weakness, until it reachs an unusually large level (> 6% increase) where it becomes non contrarian). That weakness/a downtrend could follow a gap up at the open and early strength. XAU Implied Volatility tends to indicate a trend/tone rather than necessarily a simplistic up or down session. The XAU Put/Call Ratio is another very important indicator that may disagree with XAU Implied Volatility. These indicators must be used in concert with cycle channels/trendlines (very long term, long term, intermediate term, and short term).

• The XAU Put/Call Ratio is at 1.01771 for the October expiration on 9-23 versus at 0.72165 for the October expiration on 9-16 versus at 0.84470 for the September expiration on 9-9 versus at 0.85337 for the September expiration on 9-2 versus at 1.02491 for the September expiration on 8-26 versus at 0.73494 for the August expiration on 8-12 versus at 0.81863 for the July expiration on 7-1 versus at 0.91027 for the July expiration on 6-24 versus at 0.76954 for the June expiration on 6-17 versus at 0.87064 for the June expiration on 6-10 versus at 0.80155 for the June expiration on 6-3 versus at 0.55895 (May expiration) on 5-19 versus at 1.13583 (May expiration) on 4-22. The XAU Put/Call Ratio was at 0.65704 for the final January expiration value as of 1-21. The XAU Put/Call Ratio was at 0.79348 for the final December expiration as of 12-17-04. The XAU Put/Call Ratio was at 1.03065 for the final November expiration value as of 11-19-04. The XAU Put/Call Ratio was at 0.85989 for the final October expiration value as of 10-15. If it rises 6% or less it portends strength following likely early weakness (indicated by XAU Implied Volatility). If it falls 6% or less it portends weakness. At unusually large greater than 6% moves the XAU Put/Call Ratio becomes non contrarian, so a greater than 6% rise portends weakness (unusually large rise in fear) and a greater than 6% decline portends strength (unusually large rise in complacency).
  

• A major indicator (NEM Lead Indicator) portending weakness this week (but all indicators and cycle channels/trendlines (most important consideration) must be considered collectively, not in isolation. Think "system.") is the fact that NEM underperformed the XAU last week by -0.19% (+1.09%, +0.51%, -1.32%, -0.40%, +0.98%, +0.52%, -0.08%, +0.26%, +0.81%, -0.91%, -1.00%, -2.86%, -0.38%, +0.09%, -0.39%, -0.72%, -0.69%, -1.87%, +0.45%, -2.15%, -1.17%, +0.10%, +1.83%, +0.08%, +0.44%, and +0.97% the prior 26 weeks): -1.23% vs -0.94% on 9-23, -0.04% vs -0.93% on 9-22, +3.19% vs +3.38% on 9-21, -2.82% vs -2.20% on 9-20, -0.22% vs -0.24% on 9-19.        

• The reliable non contrarian (in terms of their trading activity) gold Commercial Traders are short gold. They are clearly positioned for gold weakness (largely because of hedging) with only 88,803 long futures and options contracts versus 292,257 short futures and options contracts (data as of 9-20-05). The Commercial Traders (typically) correctly begin to take substantial profits (and sell short) as a cycle rolls over/weakens (following cycle parabolic trendline sell signals) while the Speculators tend to overshoot when making the various trading decisions (buying, selling, shorting, short covering).

• The notoriously contrarian (in terms of their trading activity) gold Speculators are correctly positioned for gold strength with 224,267 long futures and options contracts versus only 53,553 short futures and options contracts (data as of 9-20-05).

• The gold Commercial Traders added a large 6522 long futures and options contracts (added 8291, 157, 3371 the prior three weeks, sold 243 the prior week, added 4653 the prior week) and added an unusually large/huge (> 10% increase in short contracts) 40,109 short futures and options contracts (added 18,612,7588 the prior two weeks, covered 45,886, 281 the prior two weeks) which portends weakness this week (non contrarian indicator), due to the huge short trade that causes the unusually large case to revert back to non contrarian, but the large long trade points to some strength.. The most important consideration in timing any market is the cycle channels/trendlines (see chart above) and keep in mind that the data is as of 9-20-05, so the data is somewhat stale (for short term cycle trading) by the time it's analyzed, but is highly useful nonetheless, especially for intermediate term cycle trading (a few weeks/months).

• The gold Speculators (hedge funds and other speculators/traders) added an unusually large/huge (> 10% increase in long contracts) 46,468 long futures and options contracts (added 15,622, 690 the prior two weeks, sold 45,185, 2562 the prior two weeks) and added an unusually large (> 10% increase in short contracts) 10,063 short futures and options contracts (added 4127 the prior week, covered 1847, 744, 4233 the prior three weeks) which portends weakness this week (contrarian indicator), due to the huge long trade that causes the unusually large case to revert back to contrarian. The most important consideration in timing any market is the cycle channels/trendlines (see chart above). 

• The reliable non contrarian (in terms of their trading activity) silver Commercial Traders are short silver. They are clearly positioned for silver weakness (largely because of hedging) with only 31,330 long futures and options contracts versus 88,157 short futures and options contracts as of 9-20-05. 

• The notoriously contrarian (in terms of their trading activity) silver Speculators are correctly positioned for silver strength with 49,123 long futures and options contracts versus only 15,325 short futures and options contracts as of 9-20-05.

• The silver Commercial Traders sold an unusually large (> 10% decrease in long contracts) 4811 long futures and options contracts (added 1064 the prior week, sold 1426 the prior week, added 5451 the prior week) and added an unusually large/huge (> 10% increase in short contracts) 15,066 short futures and options contracts (added 801, 2112 the prior two weeks, covered 10,282, 4610, 4503, 2360 the prior four weeks) which portends weakness this week (non contrarian indicator), due to the huge short trade that causes the unusually large case to revert back to non contrarian. The most important consideration in timing any market is the cycle channels/trendlines.

• The silver Speculators (hedge funds and other speculators/traders) added an unusually large/huge (> 10% increase in long contracts) 7743 long futures and options contracts (added 2608 the prior week, sold 4411 the prior week, added 2743, 143 the prior two weeks) and covered an unusually large/huge (> 10% decrease in short contracts) 11,410 short futures and options contracts (added 2153 the prior week, covered 7654 the prior week, added 16,580 the prior week) which portends weakness this week (contrarian indicator), due to the huge long trade and the huge degree of short covering that causes the unusually large case to revert back to contrarian. The most important consideration in timing any market is the cycle channels/trendlines.

• The reliable non contrarian (in terms of their trading activity) USD Commercial Traders are now positioned for US Dollar weakness with 692 long futures and options contracts versus 6065 short futures and options contracts as of 9-20-05. Last week they sold an unusually large/huge (> 10% decrease in long contracts) 9451 long futures and options contracts (sold 1346 the prior week, added 4683 the prior week, sold 3161 the prior week) and covered an unusually large (> 10% increase in short contracts) 2733 short futures and options contracts (added 4543 the prior week, covered 6164, 1351 the prior two weeks, added 655 the prior week, covered 8222 the prior week) which portends weakness this week (non contrarian indicator), due to the huge degree of long liquidation that causes the unusually large case to revert back to non contrarian. The most important consideration in timing any market is the cycle channels/trendlines (see chart above).
  

• The notoriously contrarian (in terms of their trading activity) USD Speculators are now positioned for US Dollar strength with 7603 long futures and options contracts versus 2293 short futures and options contracts as of 9-20-05. Last week they added an unusually large/huge (> 10% increase in long contracts) 3236 long futures and options contracts (sold 1447, 473 the prior two weeks, added 577, 632 the prior two weeks, sold 8064 the prior week) and covered an unusually large 1862 (> 10% decrease in short contracts) short futures and options contracts (covered 7046 the prior week, added 8873 the prior week, covered 928 the prior week, added 300, 287, 232, 644, 21, 376 the prior six weeks) which portends USD weakness this week (contrarian indicator), because the huge long trade causes the unusually large case to revert back to contrarian. The most important consideration in timing any market is the cycle channels/trendlines (see chart above).
  

• FREE COT (Commitments of Traders) Charts (see link) reveal that the Commercial Traders generally know what they're doing and the Speculators don't. The Commercial Traders tend to be near net short extremes near major tops and near net long extremes near major bottoms, thus making them non contrarian indicators most of the time. The Speculators tend to do just the opposite and are contrarian indicators most of the time.

• Detailed analysis regarding the important long term upcycle buy signal and other important "big picture" information as well as information about my system/indicators can be found at this link.
  

• Cycle channels and trendlines are the primary market timing consideration (other tools/indicators are great for finetuning), except the NEM Lead Indicator is (really only) needed for major buy signals when the potential major cycle low occurs well above the next longer cycle's trendline, such as occurred on May 10, 2004 when long term cycle lows occurred for HUI, NEM, and the XAU well above their very long term upcycle trendlines in place since late 2000 (see top chart above). Since May 16, 2005's major intermediate term cycle low occurred right at the very long term upcycle trendline for the XAU (see 5 year chart dated 7-12-05), the NEM lead Indicator wasn't really required (in addition to the 5% follow through requirement), but given how long and brutal the (major intermediate term downcycle from 11-17-04 until 5-16-05) correction was we needed all the confidence we could get. In other words, if HUI, NEM, and the XAU bounce dramatically at their Bull Market/very long term upcycle trendlines or long term upcycle trendlines and 5% or more follow through occurs after breaking their major downcycle trendlines, that strongly suggests that the next longer cycle remains in effect and that a major buy signal has occurred.
  

• The 5% follow through requirement combined with the NEM Lead Indicator, the two new major buy/sell signal requirements, would have weeded out all six important cycle lows that occurred prior to 5-16-05 in the major correction (from 11-17-04 until 5-16-05), and, correctly indicated that 5-16-05 was a major intermediate term cycle low. So, the two new major buy/sell signal requirements worked seven consecutive times and there's only a 0.78% chance that result was due to pure luck (50% raised to the seventh power).

• My system/work is NOT about me making educated guesses and calling bottoms, even though I (mistakenly) did that in the major correction from 11-17-04 until 5-16-05 for HUI, NEM, and the XAU, partly for reasons such as HUI having, until recently (early April), a well developed trendline since 5-10-04's long term cycle low that appeared to be it's long term upcycle trendline. The reason why I'm developing a backtested system ("Trade the Cycles") is because it's impossible to consistently time the market (by educated guessing) using an unbacktested approach comprised of technical analysis and indicators. From now on, where major bottoms are concerned, I'll only indicate that a likely major bottom has occurred after the two major buy signal criteria are satisfied (The 5% follow through requirement in concert with a clearly bullish NEM Lead Indicator for a few weeks), which would have weeded out all 6 important cycle lows (see next bullet) that occurred during the major intermediate term downcycle from being major intermediate term cycle low candidates, and there's only a 1.56% probability that was the result of pure luck (50% raised to the sixth power). Assuming that May 16, 2005 really was a major intermediate term cycle low then the two major buy signal requirements will have been effective 7 consecutive times and there's only a 0.78% chance that was the result of pure luck (50% raised to the seventh power).

• The 5% follow through major buy signal requirement (after breaking through the intermediate term downcycle trendline connecting short term cycle highs) weeds out the December 8, 2004, January 6, 2005, March 29, 2005, April 15, 2005, and the April 28 cycle lows from being a major intermediate term cycle low, but not the February 8 (HUI/XAU)/9 (NEM) 2005 cycle low. However, the NEM Lead Indicator clearly indicated (weeds out) that the February 2005 cycle low probably wasn't a major low. It appears that the 5% follow through requirement in concert with a clearly bullish NEM Lead Indicator for a few weeks will work well for timing/major buy signals. Also, an Elliot Wave type A, B, C major correction pattern is likely to occur, with point C, the major cycle low, occurring relatively close to the Bull Market/very long term upcycle trendline, which helps.
  

• Buying and holding major intermediate term upcycles (that last about 3 to 12 months) makes a lot of sense, but not long term or very long term upcycles, because they're too flat (rising bottoms) and one loses too much during major corrections (However, with good stock selection, one can do very well with buy and hold during this gold/silver stock Bull Market/very long term upcycle that began in late 2000). This is a change from my belief that one should hold during long term upcycles. One should wait for a major intermediate term cycle buy signal before buying. So, it makes sense to be long during major intermediate term cycle buy signals and in cash and/or short during major intermediate term cycle sell signals.
  

• Cycle channels/trendlines are the most important consideration when timing any market. A very long term upcycle has been in place since late 2000 and a long term upcycle has been in place since May 10, 2004 for HUI, NEM, and the XAU (gold began a very long term upcycle in April 2001). Very long term upcycles (and downcycles) tend to last about 17.5 years on average. Gold's previous very long term downcycle lasted from 1980 until April 2001.

• As I've said before, if you find that the detailed technical work is too much to digest, the cycle channels/trendlines in the charts are by far the most important consideration, so one can still use my system even if the indicators/technical work are difficult to grasp (right now, sometimes with perseverance one might grasp it).

• I've created a Joe F. Rocks imaginary mutual fund at Marketocracy that will trade gold/silver stocks and maybe also precious metals via Exchange Traded Funds (ETF) like GLD (new gold ETF) using my "Trade the Cycles" system. The Fund Manager name should say Joe Ferrazzano not  "joefrocks." I bought "en masse" on 1-5-05 and was more than 90% invested on that date. This will be a way of establishing an independently calculated track record. I'll track it's performance weekly in these updates, but the link above updates the fund share price/NAV the day after each session I believe.  

• The Joe F. Rocks fund at Marketocracy will provide a great independently tracked way of assessing "Trade the Cycles" as well as my trading ability and you can compare me to other market timers. I think I have a great shot at being very near the top of Marketocracy's rankings in the near future, partly because of how great the gold/silver stock market is, but also because of my "Trade the Cycles" system. Given how volatile gold/silver stocks are it would be easy to have a substandard rate of return relative to HUI and the XAU if one wasn't good at timing gold/silver stocks. I'll be doing mostly intermediate term cycle trading (cycles that last about 4-6 weeks from cycle low to the next cycle low) and some short term cycle trading. Once the long term cycle high occurs probably in about 6 to 12 months I'll be 35% in cash and will find low volatility stocks to park most of the rest of the fund. I have to be at least 65% invested, which ties my hands some, but I should still do very well. Margin and short selling aren't allowed by Marketocracy because they're following typical mutual fund guidelines. I could end up running a real mutual fund for them if I rank very high.
  

Joe F. Rocks!

====================== End of Update ==============================

The following analysis/commentary didn't change from 4-25's update -

There's some debate about wether the gold stock Bull has ended and deflation will occur or if inflation will increase substantially. Take a look at commodities, housing, healthcare costs, education costs, etc. and what do you see? It's not deflation. The US Dollar (USD) is merely having a countertrend rally and gold a countertrend decline that has a ways to go. The USD is in a very long term downcycle that began in mid 2001 which is INFLATIONARY. Case closed. Basically the US has a crappy economy and high inflation a la the 1970s which is great for precious metals just as it was in the 1970s.

The post bubble economic cycle has deflationary effects (such as in the stock market and the economy) that are being fought with massive stimulus and an extremely easy monetary policy at least as far as rock bottom short term rates are concerned.

The cycle based system I use has stood a great test and the long term downcycle remains in effect despite trendline "buy signals" suggesting otherwise (if one didn't use/understand cycles). The long term upcycle trendlines for HUI and the XAU that began in October 2002 for HUI and in July 2002 for the XAU broke down in January of this year and those indices are now heading (I strongly believe, similar to what occurred after the prior two long term upcycles broke down as shown in the chart below) for their very long term upcycle/Bull Market trendlines in the next few months.  The XAU should bottom in the 70-75 area as the chart below reveals.

As one can see in the chart below from 2-6-04 the XAU's long term downcycle remained in effect two long term cycles ago in 2001 despite the long term downcycle becoming less steep as has recently occurred in this long term downcycle. In the previous long term downcycle in 2002 the downcycle's trend was very steep/parabolic and a long term cycle low occurred less than two months after the long term cycle high.

The XAU Put/Call Ratio collapsed (fell by > 6%) on both Thursday 3-25 and Friday 3-26, correctly portending strength each day bec